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Week 5 - Quiz Review
Test Description: This should help you review for the Week 5 Quiz. It covers Aggregate Demand and Aggregate Supply.
Instructions: Answer all questions to get your test result.
1) The aggregate demand curve is the relationship between the:
A
Price level and the purchasing of real domestic output
B
Price level and the distribution of real domestic output
C
Real domestic output bought and the real domestic output sold
D
Price level and the sales of producers
2) The labels for the axes of the aggregate demand graph should be:
A
Real domestic output on the horizontal axis and the price level on the vertical axis
B
Price of a product on the vertical axis and quantity of a product on the horizontal axis
C
Real domestic output on the vertical axis and the price level on the horizontal axis
D
Quantity of a product on the vertical axis and the price of a product on the horizontal axis
3) A decline in the quantity of real output demanded along the aggregate demand curve is a result of a(n):
A
Decrease in the price level
B
Increase in the price level
C
Increase in the level of income
D
Decrease in the level of income
4) An increase in aggregate demand is most likely to be caused by a decrease in:
A
expected future prices.
B
consumer confidence.
C
the tax rates on household income.
D
the wealth of consumers.
5) Which set of events would most likely decrease aggregate demand?
A
An increase in personal income tax rates
B
A reduction in business and personal tax rates
C
A reduction in the excess capital of the existing capital stock
D
An increase in investment spending
6) An increase in government spending will cause a(n):
A
Increase in aggregate supply
B
Decrease in aggregate supply
C
Increase in aggregate demand
D
Decrease in aggregate demand
7) An aggregate supply curve represents the relationship between the:
A
Real domestic output bought and the real domestic output sold
B
Price level and the buying of real domestic output
C
Price level and the production of real domestic output
D
Price level that producers are willing to accept and the price level buyers are willing to pay
8) The labels for the axes of an aggregate supply curve should be:
A
Real domestic output for the vertical axis and price level for the horizontal axis
B
Aggregate demand for the vertical axis and real national output for the horizontal axis
C
Real employment for the vertical axis and price level for the horizontal axis
D
Real domestic output for the horizontal axis and price level for the vertical axis
9) An increase in productivity will:
A
Decrease aggregate supply and aggregate demand
B
Increase aggregate supply and aggregate demand
C
Increase aggregate demand
D
Increase aggregate supply
10) If the prices of imported resources increase, then this event would most likely:
A
Decrease aggregate supply
B
Decrease aggregate demand
C
Increase aggregate demand
D
Increase aggregate supply
11) If Congress raised taxes on businesses, this action would:
A
Increase per-unit production costs and thus increase aggregate demand
B
Increase per-unit production costs and thus increase aggregate supply
C
Increase per-unit production costs and thus decrease aggregate supply
D
Increase aggregate demand and increase aggregate supply
12) The long-run aggregate supply curve is:
A
Downsloping
B
Vertical
C
Upsloping
D
Horizontal
13) The vertical slope of the long-run aggregate supply curve is based on the assumption that:
A
Nominal wages and other resource costs do not respond to price level changes
B
Nominal wages are less than real wages
C
Nominal wages are greater than real wages
D
Nominal wages and other resource costs do respond to price level changes
14) Cost-push inflation occurs because of a:
A
Rightward shift in the aggregate supply curve
B
Leftward shift in the aggregate demand curve
C
Leftward shift in the aggregate supply curve
D
Rightward shift in the aggregate demand curve
15) Wage contracts, efficiency wages, and the minimum wage are explanations for why:
A
There is little support for the existence of a real-balances effect
B
The aggregate demand curve slopes downward
C
Wages tend to be inflexible downward
D
Competition results in price wars
16) The magnification of small changes in spending into larger changes in output and income is produced by:
A
Saving
B
The average propensity to consume
C
The multiplier effect
D
The average propensity to save
17) A decrease in net exports will cause a(n):
A
Increase in aggregate supply
B
Decrease in aggregate supply
C
Increase in aggregate demand
D
Decrease in aggregate demand
18) An aggregate supply curve shows the:
A
Price level at which real domestic output will be in equilibrium
B
Price level at which real domestic output will be purchased
C
Level of real domestic output which will be purchased at each possible price level
D
Level of real domestic output which will be produced at each possible price level
19) Which would be one of the factors that increase aggregate demand?
A
An increase in personal income tax rates
B
An increase in the productivity of labor
C
An increase in consumer wealth
D
An increase in real interest rates
*select an answer for all questions
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