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Ch 27: Aggregate Demand

Quiz by Chen, Clara

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11 questions
Show answers
  • Q1
    If the economy is in equilibrium and the real estate market collapses, what will likely happen?
    The AD curve will shift rightward.
    The SRAS curve will shift leftward.
    The SRAS curve will shift rightward.
    The AD curve will shift leftward
    60s
  • Q2
    The relationship between the aggregate price level and the quantity of aggregate output demanded by households, businesses, the government, and the rest of the world is represented by the _____ demand.
    surplus
    market
    simple
    aggregate
    60s
  • Q3
    The interest rate effect leads to a downward-sloping aggregate demand curve because a higher price level causes consumption to _____ and investment to _____.
    decrease; decrease
    increase; decrease
    decrease; increase
    increase; increase
    60s
  • Q4
    Which statement is FALSE?
    A fall in the price level will generally lead to a rise in the level of aggregate output demanded.
    A rise in the price level lowers real wealth and results in a lower level of consumer spending.
    A fall in the price level will reduce the demand for money, raise the interest rate, and increase investment spending.
    A rise in the price level increases the demand for money, raises the interest rate, and reduces investment spending.
    60s
  • Q5
    Which of the following policies will shift the AD curve to the LEFT?
    The government spends more.
    The government raises tax rates.
    The Federal Reserve increases the money supply.
    The government cuts tax rates.
    60s
  • Q6
    Aggregate demand will shift to the RIGHT if:
    taxes go up
    the money supply shrinks.
    the aggregate price level increases.
    government purchases increase.
    60s
  • Q7
    Raising taxes shifts the _____ curve to the _____.
    aggregate demand; right
    aggregate demand; left
    short-run aggregate supply; left
    long-run aggregate supply; left
    60s
  • Q8
    If the stock of physical capital increases, all other things unchanged, the aggregate demand curve will:
    remain constant.
    shift to the left.
    become positively sloped.
    shift to the right.
    60s
  • Q9
    Changes in _____ will not shift the aggregate demand curve.
    the existing stock of physical capital
    the price level
    expectations
    wealth
    60s
  • Q10
    Suppose that the stock market crashes, which causes a large decrease in the value of many households' financial assets. The most likely outcome is a _____ the aggregate demand curve.
    movement up
    leftward shift of
    rightward shift of
    movement down
    60s
  • Q11
    If the price level rises by 10%, the purchasing power of $10,000 will:
    remain constant.
    increase to $11,000.
    decrease to $1,000.
    decrease to $9,000.
    60s

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