Aggregate Demand

(Pick one best answer from the numbered choices below)

Question 1 (Multiple Choice Worth 3 points)
Consumers rush to purchase new gaming systems and other electronic goods.
Aggregate demand will
1. increase.
2. decrease.
3. remain the same.

Question 2 (Multiple Choice Worth 3 points)

Unemployment numbers drop as more jobless Americans find positions in local
businesses. Which determinant of aggregate demand causes the change?
1. Price
2. Consumer spending
3. Investment spending
4. Government spending
5. Net exports
6. Productivity
7. Resource cost
8. Government intervention (taxes, subsidies, or regulations)
9. None of the above

Question 3 (Multiple Choice Worth 3 points)

All of the following will cause an increase in aggregate demand except an increase in
1. consumer confidence.
2. business inventories.
3. personal income taxes.
4. national exports.
5. road projects.

Question 4 (Multiple Choice Worth 3 points)

Unemployment drops as more jobless Americans find positions in local businesses.
Aggregate demand will
1. increase.
2. decrease.
3. remain the same.

Question 5 (Multiple Choice Worth 3 points)

All of the following will cause a decrease in aggregate demand except
1. an increase in imports.
2. an increase in exports.
3. a decrease in consumer spending.
4. a decrease in national income.
5. a decrease in business expansion.

Question 6 (Multiple Choice Worth 3 points)

The news of possible regulation changes decreases producer confidence. Aggregate
demand will
1. increase.
2. decrease.
3. remain the same.

Question 7 (Multiple Choice Worth 3 points)

The net export effect states that
1. as price levels fall, interest rates decrease and real GDP increases.
2. as prices rise in an economy, consumers tend to buy cheaper foreign products
and fewer domestic products.
3. if price levels drop, the value of money is higher, and consumers will spend
more.
4. aggregate demand can increase any time there is an increase in consumption,
investment, government spending, or net exports.
5. aggregate demand can decrease any time there is a decrease in consumption,
investment, government spending, or net exports.

Question 8 (Multiple Choice Worth 3 points)

The interest rate effect states that
1. as price levels fall, interest rates decrease and real GDP increases.
2. as prices rise in an economy, consumers tend to buy cheaper foreign products
and fewer domestic products.
3. if price levels drop, the value of money is higher, and consumers will spend
more.
4. aggregate demand can increase any time there is an increase in consumption,
investment, government spending, or net exports.
5. aggregate demand can decrease any time there is a decrease in consumption,
investment, government spending, or net exports.

Question 9 (Multiple Choice Worth 3 points)

Manufacturers begin building a new plant in Arizona. Which determinant of
aggregate demand causes the change?
1. Price
2. Consumer spending
3. Investment spending
4. Government spending
5. Net exports
6. Productivity
7. Resource cost
8. Government intervention (taxes, subsidies, or regulations)
9. None of the above

Question 10 (Multiple Choice Worth 3 points)

Congress decreases personal income taxes. Which determinant of aggregate demand
causes the change?
1. Price
2. Consumer spending
3. Investment spending
4. Government spending
5. Net exports

6.
7.
8.
9.

Productivity
Resource cost
Government intervention (taxes, subsidies, or regulations)
None of the above

Question 11 (Multiple Choice Worth 3 points)

If foreigners find U.S. goods more desirable and less costly, then
there is a movement down the AD curve as price level decreased.
1. AD shifts right and price level would decrease.
2. AD shifts right and price level would increase.
3. AD shifts left and price level would decrease.
4. AD shifts left and the price level would increase.

Question 12 (Multiple Choice Worth 3 points)

If interest rates decrease, then
there is a movement down the AD curve as price level decreased.
1. AD shifts right and price level would decrease.
2. AD shifts right and price level would increase.
3. AD shifts left and price level would decrease.
4. AD shifts left and the price level would increase.

Question 13 (Multiple Choice Worth 3 points)

Newspapers report that consumer debt is at an all time high. Aggregate demand will
1. increase.
2. decrease.
3. remain the same.

Question 14 (Multiple Choice Worth 3 points)

Manufacturers begin building a new plant in Arizona. Aggregate demand will
1. increase.

2.
3.

decrease.
remain the same.

Question 15 (Multiple Choice Worth 3 points)

Fair weather helps produce the best crop of peanuts in a decade. Which determinant
of aggregate demand causes the change?
1. Price
2. Consumer spending
3. Investment spending
4. Government spending
5. Net exports
6. Productivity
7. Resource cost
8. Government intervention (taxes, subsidies, or regulations)
9. None of the above

Question 16 (Multiple Choice Worth 3 points)

The Government Accounting Office (GAO) announces deep cuts to social security,
Medicare, and welfare programs. Aggregate demand will
1. increase.
2. decrease.
3. remain the same.

Question 17 (Multiple Choice Worth 3 points)

Tourists flock to the United States for vacation after disposable income rises in
Europe. Which determinant of aggregate demand causes the change?
1. Price
2. Net exports
3. Investment spending
4. Government spending
5. Consumer spending
6. Productivity
7. Resource cost
8. Government intervention (taxes, subsidies, or regulations)

9.

None of the above

Question 18 (Multiple Choice Worth 3 points)

The Government Accounting Office (GAO) announces deep cuts to social security,
Medicare, and welfare programs. Which determinant of aggregate demand causes
the change?
1. Price
2. Consumer spending
3. Investment spending
4. Government spending
5. Net exports
6. Productivity
7. Resource cost
8. Government intervention (taxes, subsidies, or regulations)
9. None of the above

Question 19 (Multiple Choice Worth 3 points)

When price level decreases,
1. AD will shift left.
2. AD will shift right.
3. there will be a movement to the right along the AD curve.
4. there will be a movement to the left along the AD curve.
5. a corresponding decrease in output will always occur.

Question 20 (Multiple Choice Worth 3 points)

Tax cuts increase consumer incentive to save. Which determinant(s) of aggregate
demand cause the change?
1. Price
2. Consumer spending only
3. Investment spending and consumer spending
4. Government intervention (taxes, subsidies, or regulations)
5. Productivity and consumer spending