#1
Which of the following best describes aggregate demand?
The total quantity of goods and services demanded in an economy at a given price level and in a given period of time
The total quantity of goods and services supplied in an economy at a given price level and in a given period of time
The total quantity of goods and services demanded in an economy at all price levels and in a given period of time
The total quantity of goods and services supplied in an economy at all price levels and in a given period of time
#2
Which of the following factors is likely to cause a rightward shift in the aggregate demand curve?
A decrease in consumer confidence
An increase in taxes
A decrease in government spending
An increase in household wealth
#3
What is the primary determinant of investment in the Keynesian expenditure model?
Interest rates
Disposable income
Government spending
Consumption
#4
Which of the following is a determinant of long-run aggregate supply?
Technological advancements
Changes in government spending
Fluctuations in consumer confidence
Shifts in monetary policy
#5
What does the long-run aggregate supply curve depict?
The relationship between output and the price level in the short run
The relationship between output and the price level in the long run
The relationship between output and potential GDP
The relationship between output and aggregate demand
#6
What happens to equilibrium output and price level when aggregate demand decreases and aggregate supply remains constant?
Equilibrium output decreases, and the price level decreases
Equilibrium output decreases, and the price level increases
Equilibrium output increases, and the price level decreases
Equilibrium output increases, and the price level remains constant
#7
Which of the following factors is likely to cause a leftward shift in the aggregate supply curve?
An increase in government spending
A decrease in taxes
An increase in the price level
A decrease in productivity
#8
What is the primary determinant of consumption in the Keynesian consumption function?
Disposable income
Interest rates
Government spending
Investment
#9
Which of the following is a characteristic of the short-run aggregate supply curve?
It is vertical
It is upward sloping
It is perfectly elastic
It is perfectly inelastic
#10
Which of the following best describes the concept of the multiplier effect in economics?
The process by which changes in government spending directly impact aggregate demand
The process by which changes in one economic variable lead to successive changes in other economic variables
The process by which changes in consumption lead to corresponding changes in investment
The process by which changes in investment lead to corresponding changes in consumption
#11
What is the main reason behind the upward slope of the short-run aggregate supply curve?
Nominal wages increase faster than prices
Input prices decrease as output increases
Firms are willing to produce more at higher price levels due to fixed input costs
Output increases faster than input prices
#12
What is the long-run effect of an increase in aggregate demand on output and the price level, assuming aggregate supply remains unchanged?
Output increases, and the price level decreases
Output increases, and the price level increases
Output remains constant, and the price level decreases
Output remains constant, and the price level increases
#13
In the context of aggregate supply, what does the term 'sticky wages' refer to?
Wages that are adjusted frequently in response to changes in the price level
Wages that are resistant to change, leading to inefficiencies in the labor market
Wages that are set based on productivity levels
Wages that are determined solely by government regulations
#14
What is the relationship between the natural rate of unemployment and potential GDP in the long run?
They are inversely related
They are directly proportional
They are unrelated
They are negatively correlated
#15
In the context of the Phillips curve, what does a movement along the curve represent?
A change in the long-run equilibrium
A trade-off between inflation and unemployment in the short run
A shift in aggregate demand
A change in the natural rate of unemployment
#16
In the long run, what happens to the equilibrium price level if aggregate demand increases?
The price level remains constant
The price level decreases
The price level increases
The price level decreases initially, then increases
#17
What is the implication of a shift from a short-run Phillips curve to a long-run Phillips curve?
Unemployment will increase
Inflation will increase
There will be no change in unemployment or inflation
Inflation will decrease