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?
