#1
Which of the following is a component of aggregate demand?
Government spending
Consumer debt
Foreign exchange rates
Stock market indices
#2
Which of the following is a component of investment in the aggregate demand equation?
Wages and salaries
Government purchases
Business capital expenditures
Consumption of goods and services
#3
What is the formula for calculating aggregate demand?
AD = C + I + G + (X - M)
AD = C + I - G + (X - M)
AD = C - I + G + (X - M)
AD = C - I - G + (X - M)
#4
How does an increase in consumer confidence affect aggregate demand?
Increases aggregate demand
Decreases aggregate demand
No effect on aggregate demand
Makes aggregate demand more volatile
#5
What role does the interest rate play in influencing aggregate demand?
Higher interest rates increase consumption and investment
Lower interest rates decrease consumption and investment
Interest rates have no impact on aggregate demand
Interest rates only affect government spending
#6
How does a depreciation of the domestic currency impact net exports and aggregate demand?
Increases net exports and aggregate demand
Decreases net exports and aggregate demand
No impact on net exports and aggregate demand
Increases net exports but decreases aggregate demand
#7
How does an increase in government spending impact aggregate demand?
Decreases aggregate demand
Increases aggregate demand
No effect on aggregate demand
Increases only investment in aggregate demand
#8
How does an increase in the exchange rate impact net exports and aggregate demand?
Increases net exports and aggregate demand
Decreases net exports and aggregate demand
No impact on net exports and aggregate demand
Increases net exports but decreases aggregate demand
#9
How do expectations about future economic conditions influence consumer spending and aggregate demand?
Positive expectations lead to increased spending and aggregate demand
Negative expectations lead to increased spending and aggregate demand
Positive expectations lead to decreased spending and aggregate demand
Negative expectations lead to decreased spending and aggregate demand
#10
Which of the following is an example of an external shock affecting aggregate demand?
Change in government spending
Shift in consumer preferences
Natural disaster impacting production
Central bank interest rate adjustment
#11
In the context of aggregate demand, what does the multiplier effect refer to?
Initial change in spending leads to a larger overall change in real GDP
Decrease in spending causing a chain reaction of reduced economic activity
Impact of inflation on consumer purchasing power
Government's influence on the money supply
#12
What is the wealth effect in the context of aggregate demand?
Increase in wealth leads to increased spending
Decrease in wealth leads to increased saving
Wealth has no impact on spending patterns
Increase in wealth leads to decreased spending
#13
What is the relationship between inflation and aggregate demand?
Higher inflation increases aggregate demand
Lower inflation increases aggregate demand
Inflation has no impact on aggregate demand
Higher inflation decreases aggregate demand
#14
What is the difference between autonomous consumption and induced consumption in the context of aggregate demand?
Autonomous consumption depends on income, while induced consumption is independent of income
Autonomous consumption is independent of income, while induced consumption depends on income
Both autonomous and induced consumption depend on income
Neither autonomous nor induced consumption depends on income
#15
What is the importance of the accelerator effect in understanding changes in investment and aggregate demand?
It explains the relationship between interest rates and investment
It highlights the impact of technological advancements on investment
It helps predict changes in investment based on changes in output and income
It measures the impact of government policies on investment
#16
What is the role of the central bank's monetary policy in influencing aggregate demand?
Monetary policy has no impact on aggregate demand
Tightening monetary policy increases aggregate demand
Loosening monetary policy increases aggregate demand
Monetary policy only affects government spending