Question 1

When the stock market continues a steady climb upwards,this increases consumer confidence and wealth.What impact does this have on consumption and aggregate demand?

Accepted Answer

A) Consumption decreases and aggregate demand increases. 
B) Consumption and aggregate demand both decrease. 
C) Consumption and aggregate demand both increase. 
D) Consumption increases and aggregate demand decreases. 
A) Consumption decreases and aggregate demand increases. 
B) Consumption and aggregate demand both decrease. 
C) Consumption and aggregate demand both increase. 
D) Consumption increases and aggregate demand decreases.

Question 2

What impact would an increase in the Canadian price level have?

Accepted Answer

A) It will decrease money demand in Canada. 
B) It will increase real GDP demanded in Canada. 
C) It will decrease Canadian exports. 
D) It will decrease Canadian imports. 
A) It will decrease money demand in Canada. 
B) It will increase real GDP demanded in Canada. 
C) It will decrease Canadian exports. 
D) It will decrease Canadian imports.

Question 3

Figure 8-1
  
-Refer to Figure 8-1.Which of the following could NOT shift the investment demand curve from ID₀ to ID₂?

Accepted Answer

A) the discovery of new, profitable investment opportunities 
B) inventories rising above desired levels 
C) higher business taxes 
D) pessimistic forecasts of sustained future profits 
A) the discovery of new, profitable investment opportunities 
B) inventories rising above desired levels 
C) higher business taxes 
D) pessimistic forecasts of sustained future profits

Question 4

Which of the following will NOT increase the investment demand curve?

Accepted Answer

A) the introduction of new technology offering profitable investment opportunities 
B) business expectations of higher future sales and profits 
C) a decrease in the real interest rate 
D) business inventories that have fallen far below desired levels 
A) the introduction of new technology offering profitable investment opportunities 
B) business expectations of higher future sales and profits 
C) a decrease in the real interest rate 
D) business inventories that have fallen far below desired levels

Question 5

In an open economy as the price level decreases,what is the impact on the demand for domestic goods relative to foreign goods and the quantity of real GDP demanded?

Accepted Answer

A) The demand for domestic goods will increase, resulting in a decrease in the quantity of real DGP demanded. 
B) The demand for domestic goods will decrease, resulting in an increase in the quantity of real GDP demanded. 
C) The demand for domestic goods will increase, resulting in an increase in the quantity of real GDP demanded. 
D) The demand for domestic goods will decrease, resulting in a decrease in the quantity of real GDP demanded. 
A) The demand for domestic goods will increase, resulting in a decrease in the quantity of real DGP demanded. 
B) The demand for domestic goods will decrease, resulting in an increase in the quantity of real GDP demanded. 
C) The demand for domestic goods will increase, resulting in an increase in the quantity of real GDP demanded. 
D) The demand for domestic goods will decrease, resulting in a decrease in the quantity of real GDP demanded.

Question 6

What will lead to an increase in the dollar amount of investment in the investment and saving market?

Accepted Answer

A) business expectations of lower future sales and profits 
B) the introduction of new profitable technology investment opportunities 
C) business inventories that have risen far above desired levels 
D) an increase in real interest rates 
A) business expectations of lower future sales and profits 
B) the introduction of new profitable technology investment opportunities 
C) business inventories that have risen far above desired levels 
D) an increase in real interest rates

Question 7

An increase in consumer confidence,an increase in wealth,or a tax cut can increase consumption and shift the aggregate demand curve to the right.

Accepted Answer

A) True 
 B)False

Question 8

Rafael lives in Miami,Florida,and like many Americans he is experiencing the effects of the U.S.recession.How is his misfortune likely to impact Canadian aggregate demand?

Accepted Answer

A) Positively, because he prefers to make all his purchases in the U.S. from U.S. firms. 
B) Negatively, because he prefers to make all his purchases in the U.S. from U.S. firms. 
C) Negatively, since he will be in a worse position to purchase Canadian-made goods. 
D) Positively, since we are all members of North American free-trade zone. 
A) Positively, because he prefers to make all his purchases in the U.S. from U.S. firms. 
B) Negatively, because he prefers to make all his purchases in the U.S. from U.S. firms. 
C) Negatively, since he will be in a worse position to purchase Canadian-made goods. 
D) Positively, since we are all members of North American free-trade zone.

Question 9

Which of the following will decrease when the price level falls?

Accepted Answer

A) money demand 
B) money supplied 
C) real GDP demanded 
D) the real level of investment 
A) money demand 
B) money supplied 
C) real GDP demanded 
D) the real level of investment

Question 10

If a person's consumption goes from $8 000 to $12 000 when her disposable income goes from $10 000 to $20 000,what is her MPC equal to?

Accepted Answer

A) 0.4 
B) 0.6 
C) 0.75 
D) 0.8 
A) 0.4 
B) 0.6 
C) 0.75 
D) 0.8

Question 11

Figure 8-1
  
-Refer to Figure 8-1.Which of the following could shift the investment demand curve from ID₀ to ID₂?

Accepted Answer

A) the discovery of new, profitable investment opportunities 
B) inventories falling below desired levels 
C) the development of new, more efficient production machinery 
D) higher business taxes 
A) the discovery of new, profitable investment opportunities 
B) inventories falling below desired levels 
C) the development of new, more efficient production machinery 
D) higher business taxes

Question 12

What will cause consumption and,as a result,aggregate demand to decrease?

Accepted Answer

A) increased population 
B) a tax cut 
C) an optimistic forecast of future income growth 
D) a fall in consumer confidence 
A) increased population 
B) a tax cut 
C) an optimistic forecast of future income growth 
D) a fall in consumer confidence

Question 13

What is a decrease in interest rates likely to result in?

Accepted Answer

A) no change in either consumption or investment spending 
B) a decrease in investment spending 
C) an increase in consumption spending 
D) a decrease in consumption spending 
A) no change in either consumption or investment spending 
B) a decrease in investment spending 
C) an increase in consumption spending 
D) a decrease in consumption spending

Question 14

Which of the following will decrease aggregate demand?

Accepted Answer

A) imports falling faster than exports 
B) exports rising faster than imports 
C) exports rising and imports falling 
D) exports falling faster than imports 
A) imports falling faster than exports 
B) exports rising faster than imports 
C) exports rising and imports falling 
D) exports falling faster than imports

Question 15

As the price level increases,what is the impact on real wealth and purchasing power?

Accepted Answer

A) Real wealth and purchasing power both increase. 
B) Real wealth decreases and purchasing power increases. 
C) Real wealth increases and purchasing power decreases. 
D) Real wealth and purchasing power both decrease. 
A) Real wealth and purchasing power both increase. 
B) Real wealth decreases and purchasing power increases. 
C) Real wealth increases and purchasing power decreases. 
D) Real wealth and purchasing power both decrease.

Question 16

Under which of the following circumstances will investment decrease?

Accepted Answer

A) if business taxes decrease or if business confidence decreases 
B) if business taxes increase or if business confidence decreases 
C) if business taxes decrease or if business confidence increases 
D) if business taxes increase or if business confidence increases 
A) if business taxes decrease or if business confidence decreases 
B) if business taxes increase or if business confidence decreases 
C) if business taxes decrease or if business confidence increases 
D) if business taxes increase or if business confidence increases

Question 17

What will result as part of the interest rate effect when the price level rises?

Accepted Answer

A) Interest rates will decrease. 
B) A lower quantity of real GDP will be demanded. 
C) The dollar amount of investment will increase. 
D) Money supply will increase. 
A) Interest rates will decrease. 
B) A lower quantity of real GDP will be demanded. 
C) The dollar amount of investment will increase. 
D) Money supply will increase.

Question 18

Which of the following changes in disposable income would lead to the smallest increase in consumption?

Accepted Answer

A) a $30 000 increase in disposable income, if MPC equals 0.25 
B) a $15 000 increase in disposable income, if MPC equals 0.6 
C) a $20 000 increase in disposable income, if MPC equals 0.5 
D) a $12 000 increase in disposable income, if MPC equals 0.75 
A) a $30 000 increase in disposable income, if MPC equals 0.25 
B) a $15 000 increase in disposable income, if MPC equals 0.6 
C) a $20 000 increase in disposable income, if MPC equals 0.5 
D) a $12 000 increase in disposable income, if MPC equals 0.75

Question 19

With which of the following marginal propensities to consume would a given change in disposable income have the smallest effect on consumption?

Accepted Answer

A) 0.2 
B) 0.4 
C) 0.6 
D) 0.8 
A) 0.2 
B) 0.4 
C) 0.6 
D) 0.8

Question 20

Which of the following will NOT shift the investment demand curve?

Accepted Answer

A) business inventories that have fallen far below desired levels 
B) the introduction of new, profitable, technological investment opportunities 
C) a decrease in real interest rates 
D) business expectations of higher future sales and profits 
A) business inventories that have fallen far below desired levels 
B) the introduction of new, profitable, technological investment opportunities 
C) a decrease in real interest rates 
D) business expectations of higher future sales and profits

When the stock market continues a steady climb upwards,this increases consumer confidence and wealth.What impact does this have on consumption and aggregate demand?

What impact would an increase in the Canadian price level have?

Figure 8-1 -Refer to Figure 8-1.Which of the following could NOT shift the investment demand curve from ID₀ to ID₂?

Which of the following will NOT increase the investment demand curve?

In an open economy as the price level decreases,what is the impact on the demand for domestic goods relative to foreign goods and the quantity of real GDP demanded?

What will lead to an increase in the dollar amount of investment in the investment and saving market?

An increase in consumer confidence,an increase in wealth,or a tax cut can increase consumption and shift the aggregate demand curve to the right.

Rafael lives in Miami,Florida,and like many Americans he is experiencing the effects of the U.S.recession.How is his misfortune likely to impact Canadian aggregate demand?

Which of the following will decrease when the price level falls?

If a person's consumption goes from $8 000 to $12 000 when her disposable income goes from $10 000 to $20 000,what is her MPC equal to?

Figure 8-1 -Refer to Figure 8-1.Which of the following could shift the investment demand curve from ID₀ to ID₂?

What will cause consumption and,as a result,aggregate demand to decrease?

What is a decrease in interest rates likely to result in?

Which of the following will decrease aggregate demand?

As the price level increases,what is the impact on real wealth and purchasing power?

Under which of the following circumstances will investment decrease?

What will result as part of the interest rate effect when the price level rises?

Which of the following changes in disposable income would lead to the smallest increase in consumption?

With which of the following marginal propensities to consume would a given change in disposable income have the smallest effect on consumption?

Which of the following will NOT shift the investment demand curve?

The Role and Method of Economics

Scarcity, trade-Offs, and Production Possibilities

Supply and Demand

Bringing Supply and Demand Together

Introduction to the Macroeconomy

Measuring Economic Performance

Economic Growth in the Global Economy

Aggregate Supply and Macroeconomic Equilibrium

Fiscal Policy

Money and the Banking System

The Bank of Canada

Monetary Policy

International Trade

International Finance

Filters

Exam 8: Aggregate Demand

When the stock market continues a steady climb upwards,this increases consumer confidence and wealth.What impact does this have on consumption and aggregate demand?

What impact would an increase in the Canadian price level have?

Figure 8-1 -Refer to Figure 8-1.Which of the following could NOT shift the investment demand curve from ID₀ to ID₂?

Which of the following will NOT increase the investment demand curve?

In an open economy as the price level decreases,what is the impact on the demand for domestic goods relative to foreign goods and the quantity of real GDP demanded?

What will lead to an increase in the dollar amount of investment in the investment and saving market?

An increase in consumer confidence,an increase in wealth,or a tax cut can increase consumption and shift the aggregate demand curve to the right.

Rafael lives in Miami,Florida,and like many Americans he is experiencing the effects of the U.S.recession.How is his misfortune likely to impact Canadian aggregate demand?

Which of the following will decrease when the price level falls?

If a person's consumption goes from $8 000 to $12 000 when her disposable income goes from $10 000 to $20 000,what is her MPC equal to?

Figure 8-1 -Refer to Figure 8-1.Which of the following could shift the investment demand curve from ID₀ to ID₂?

What will cause consumption and,as a result,aggregate demand to decrease?

What is a decrease in interest rates likely to result in?

Which of the following will decrease aggregate demand?

As the price level increases,what is the impact on real wealth and purchasing power?

Under which of the following circumstances will investment decrease?

What will result as part of the interest rate effect when the price level rises?

Which of the following changes in disposable income would lead to the smallest increase in consumption?

With which of the following marginal propensities to consume would a given change in disposable income have the smallest effect on consumption?

Which of the following will NOT shift the investment demand curve?

The Role and Method of Economics

Scarcity, trade-Offs, and Production Possibilities

Supply and Demand

Bringing Supply and Demand Together

Introduction to the Macroeconomy

Measuring Economic Performance

Economic Growth in the Global Economy

Aggregate Supply and Macroeconomic Equilibrium

Fiscal Policy

Money and the Banking System

The Bank of Canada

Monetary Policy

International Trade

International Finance

Filters