Aggregate Demand and Supply MCQs
Aggregate Demand and Supply MCQs
The following Aggregate Demand and Supply MCQs have been compiled by our experts through research, in order to test your knowledge of the subject of Aggregate Demand and Supply. We encourage you to answer these multiple-choice questions to assess your proficiency.
Please continue by scrolling down.
1: The total demand for all the final goods and services in the economy is called
A. Aggregate demand
B. Aggregate curve
C. Aggregate line
D. All of these
2: Aggregate demand graph that shows the ____ relationship between the price level and RGDP demanded
A. Direct
B. Inverse
C. Constant
D. Variation
3: The total quantity of final goods and services suppliers are willing and able to supply at a given price level is called
A. Aggregate demand
B. Aggregate curve
C. Aggregate line
D. Aggregate supply curve
4: Cost push inflation is price-level ____ due to a negative supply shock
A. Positive
B. Negative
C. Constant
D. Change
5: Demand pull inflation is price-level increase due to an ___ in aggregate demand
A. Increase
B. Decrease
C. Constant
D. All of these
6: The ____ gap that occurs when the actual output is greater than the potential output is called inflationary gap
A. Input
B. Output
C. Line
D. Proper
7: Long run aggregate supply curve is the graphical relationship between RGDP and the price level when output prices and input prices can fully adjust to economic changes
A. True
B. False
8: The difference between the value of exports and the value of imports is called
A. Gross exports
B. Net exports
C. Main exports
D. Total exports
9: A type of model that includes international trade effects is ___ economy
A. Open
B. Closed
C. Proper
D. Positive
10: The output gap that occurs when the actual output is ___ than the potential output is recessionary gap
A. Less
B. Greater
C. Equal
D. Zero
11: Short run aggregate supply curve is the graphical relationship between RGDP and the price level when output prices can change but input prices are unable to adjust
A. True
B. False
12: A situation in which lower growth and higher prices occur together is called
A. Inflation
B. Stagflation
C. Aggregation
D. None of these
13: Unexpected temporary events that can either increase or decrease aggregate supply is called
A. Extra shocks
B. Supply shocks
C. Positive shocks
D. Negative shocks
14: Wage and price inflexibility is the tendency for prices and wages to only adjust ____downward to changes in the economy
A. Quickly
B. Slowly
C. Mainly
D. None of these
15: Models that include international trade effects are called ______ models.
A. Open economy
B. Disposable income
C. Closed economy
D. Government purchase
16: Household spending contributes to which components of aggregate demand?
A. Investment and loanable funds
B. GDP and disposable income
C. Consumption and imports
D. Disposable income and government purchases
17: The total amount of real goods and services produced in the United States that foreigners and American households, firms, and government entities want to purchase is shown in a(n) ______ curve.
A. Long-run aggregate supply
B. Aggregate demand
C. Short-run aggregate supply
D. Individual demand
18: When the price level in the United States falls relative to the price level in other countries, ceteris paribus, what does the foreign demand effect say will happen?
A. U.S. exports will decrease and U.S. imports will increase.
B. U.S. exports and U.S. imports will both decrease.
C. U.S. exports will increase and U.S. imports will decrease.
D. U.S. exports and U.S. imports will both increase.
19: Anything that changes the amount of total spending in the economy (holding ______ constant) will shift the ______ curve.
A. Consumption; long-run aggregate supply
B. Price levels; aggregate demand
C. Net exports; short-run aggregate supply
D. Investment; aggregate supply
20: An increase in population will ______.
A. Decrease consumption
B. Decrease aggregate supply
C. Increase aggregate supply
D. Increase aggregate demand
21: The total quantity of final goods and services suppliers are willing and able to supply at a given price level is shown on a(n) ______ curve.
A. Investment
B. Disposable income
C. Aggregate supply
D. Aggregate demand
22: How does an increase in the price level affect the short-run aggregate supply curve?
A. There is a leftward shift in the curve.
B. There is a rightward movement along the curve.
C. There is a rightward shift in the curve.
D. There is a leftward movement along the curve.
23: Both the long-run aggregate supply curve and the short-run aggregate supply curve can shift rightward due to ______.
A. Increases in factors of production
B. Increases in money wages
C. Decreases in factors of production
D. Positive supply shocks
24: The long-run aggregate supply curve can be shifted to the left by ______.
A. Overregulation
B. Lower tax rates
C. Favorable weather
D. Technological advances
25: What are the effects on the short-run aggregate supply (SRAS) curve and the long-run aggregate supply (LRAS) curve when costs of production fall and potential real output expands?
A. The SRAS curve shifts leftward, and the LRAS curve shifts rightward.
B. Both curves shift leftward.
C. The SRAS curve shifts rightward, and the LRAS curve shifts leftward.
D. Both curves shift rightward.
26: Only a short-run equilibrium that is ______ is also a long-run equilibrium.
A. Greater than potential output
B. At a very low price level
C. In a recessionary gap
D. At potential output
27: The long-run aggregate supply curve for the United States ______ over time.
A. Shifts rightward
B. Becomes horizontal
C. Shifts leftward
D. Remains in the same position
28: When graphically representing aggregate supply (AS), the classical model relies solely on the ______ AS curve.
A. Upward sloping short-run
B. Horizontal long-run
C. Downward sloping short-run
D. Vertical long-run
29: In the Keynesian model the short-run aggregate supply curve is horizontal over the range of output where ______.
A. Actual real GDP is above potential GDP and the economy is beyond capacity
B. A change in aggregate demand has a large impact on the price level
C. Actual real GDP is below potential GDP and firms are operating with excess capacity
D. A change in aggregate demand has very little change on output
30: An increase in aggregate demand results in a(n) ________ in the ________.
A. Expansion; short run
B. Recession; short run
C. Expansion; long run
31: Consumers are ____________ to changes in the price of used clothing.
A. Very elastic.
B. Unitary elastic.
C. Very inelastic.
D. None of the above
32: The real wage rate definitely falls if the money wage rate ________ and the price level ________.
A. Increase; greater than
B. Remains constant; rises
C. Both of these
D. None of these
33: A change in _____ does not shift the demand curve.
A. Taste
B. Opportunity costs
C. Population
D. Income
List of Aggregate Demand and S...
Available in:
Aggregate Demand and Supply MCQs
