#1
Which of the following is a component of aggregate demand (AD)?
Government spending
ExplanationGovernment spending contributes to aggregate demand.
#2
What effect does an increase in consumer confidence have on aggregate demand (AD)?
Increases AD
ExplanationIncreased consumer confidence boosts aggregate demand.
#3
What is the impact of a decrease in government spending on the aggregate demand (AD) curve?
Shifts AD to the left
ExplanationReduced government spending shifts the aggregate demand curve leftward.
#4
Which of the following is a determinant of aggregate demand (AD)?
Income tax rates
ExplanationIncome tax rates influence aggregate demand.
#5
Which of the following is a factor that can lead to a shift in the long-run aggregate supply (LRAS) curve?
Technological advancements
ExplanationTechnological advancements shift the LRAS curve.
#6
What is likely to happen if there is a decrease in the price level and all other factors remain constant?
An increase in aggregate demand (AD)
ExplanationA decrease in price level typically increases aggregate demand.
#7
What causes a rightward shift in the long-run aggregate supply (LRAS) curve?
Technological advancements
ExplanationTechnological advancements lead to increased long-run aggregate supply.
#8
What is the relationship between the unemployment rate and the aggregate demand (AD) curve?
As unemployment decreases, AD increases
ExplanationA decrease in unemployment typically leads to an increase in aggregate demand.
#9
Which of the following is a determinant of long-run aggregate supply (LRAS)?
Technological advancements
ExplanationTechnological advancements affect long-run aggregate supply.
#10
In the aggregate demand-aggregate supply (AD-AS) model, what is the effect of an increase in the money supply?
Shifts AD to the right
ExplanationIncreased money supply typically shifts the aggregate demand curve to the right.
#11
What is the result of an increase in both aggregate demand (AD) and short-run aggregate supply (SRAS)?
Higher output, lower price level
ExplanationIncreased demand and supply lead to higher output but a lower price level.
#12
What happens to equilibrium output if aggregate demand (AD) decreases and short-run aggregate supply (SRAS) increases?
Output remains unchanged
ExplanationThe conflicting effects leave output unchanged at equilibrium.
#13
How does an increase in interest rates affect investment and aggregate demand (AD)?
Decreases investment, decreases AD
ExplanationHigher interest rates discourage investment, leading to a decrease in aggregate demand.
#14
In the long run, what happens if aggregate demand (AD) exceeds aggregate supply?
Inflation
ExplanationExcess demand over supply leads to inflation in the long run.
#15
In the short run, what happens to the price level and output when there is a decrease in aggregate demand (AD)?
Price level decreases, output decreases
ExplanationIn the short run, a decrease in AD leads to lower prices and output.