Macroeconomic Equilibrium and Aggregate Demand Quiz

Disposable income determines consumption in the Keynesian consumption function.

Exports are not a part of aggregate demand (AD).

There is an inverse relationship between the price level and consumption in the Keynesian consumption function.

Unemployment benefits are an example of automatic stabilizers in fiscal policy.

AD curve illustrates the relationship between price level and quantity of goods and services demanded.

An economy can be stuck in a recessionary gap due to insufficient aggregate demand.

The multiplier effect is the amplification of an initial change in spending through successive rounds of spending.

MPC is calculated as the change in consumption divided by the change in disposable income.

The liquidity trap refers to a situation where interest rates are so low that monetary policy becomes ineffective.

The crowding-out effect in macroeconomics occurs when an increase in government spending leads to a decrease in private investment.

Both price level and output increase when aggregate demand increases with constant aggregate supply in the AD-AS model.

Technological advancements can cause a shift in the long-run aggregate supply (LRAS) curve.

An increase in the money supply shifts the aggregate demand (AD) curve to the right, assuming other factors remain constant.

As the marginal propensity to consume (MPC) decreases, the multiplier increases.

Discretionary fiscal policy involves deliberate changes in government spending or taxation, while automatic stabilizers are built-in mechanisms that automatically stabilize the economy.

The Phillips curve in macroeconomic analysis illustrates the relationship between inflation and unemployment.