Module 17Online version Aggregate Demand - Practice Quiz by Zachary Foust 1 Which of the following is a reason why the aggregate demand curve slopes downward? a As the price of a good rises, consumers shift to relatively cheaper substitutes. b As the price level rises, the purchasing power of money falls. c As the price level rises, the interest rate falls. 2 Which of the following is a reason why the aggregate demand curve slopes downward? a As the price level rises, the interest rate rises. b As the price level rises, the purchasing power of money rises. c As the price of a good rises, consumers shift to relatively cheaper substitutes. 3 Which of the following is indicated by a rightward shift of the aggregate demand curve? a A decrease in aggregate demand b An increase in aggregate demand c A decrease in the price level 4 Assume that the price level decreases from 240 to 230. Will aggregate demand increase, decrease, or remain unchanged? a Aggregate demand will increase. b Aggregate demand will decrease. c Aggregate demand will remain unchanged. 5 The economy starts at the full employment level of output. Then, households become more pessimistic about the future. Will aggregate demand increase, decrease, or remain unchanged? a Aggregate demand will increase. b Aggregate demand will decrease. c Aggregate demand will remain unchanged. 6 The economy starts at the full employment level of output. Then, the real estate market booms. Will aggregate demand increase, decrease, or remain unchanged? a Aggregate demand will increase. b Aggregate demand will decrease. c Aggregate demand will remain unchanged. 7 The economy starts at the full employment level of output. Then, the existing stock of physical capital rises. Will aggregate demand increase, decrease, or remain unchanged? a Aggregate demand will increase. b Aggregate demand will decrease. c Aggregate demand will remain unchanged. 8 The economy starts at the full employment level of output. Then, the government increases spending on roads. Will aggregate demand increase, decrease, or remain unchanged? a Aggregate demand will increase. b Aggregate demand will decrease. c Aggregate demand will remain unchanged. 9 The economy starts at the full employment level of output. Then, the government increases personal income taxes. Will aggregate demand increase, decrease, or remain unchanged? a Aggregate demand will increase. b Aggregate demand will decrease. c Aggregate demand will remain unchanged. 10 The economy starts at the full employment level of output. Then, interest rates rise. Will aggregate demand increase, decrease, or remain unchanged? a Aggregate demand will increase. b Aggregate demand will decrease. c Aggregate demand will remain unchanged.
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