AD/AS basics

Which of the following is NOT a determinant of consumption?

• Exchange rates

• Wealth (perceived)

• Real interest rates

• Household debt

The downward slope of AD is explained through three effects, the interest rate effect, the net export effect, and the ............ effect

Which of these is correct?

• AD = C + I + G + (X-M)

• AD = C + G + (X-M)

• AD = C + M + G + (X-I)

• AD = Y + C + G + (X-I)

• AD = C + I + S + (X-M)

In the US, which component makes up the largest share of AD?

• Consumption

• Investment

• Net Exports

• Government Spending

According to the Keynesian School of thought, is SRAS elastic or inelastic below full employment?

• Elastic

• Inelastic

According to the New-Classical school of thought, despite changes in AD, in the long run output will always return to the ... ... level of output.

According to Keynesian theory wages, and therefore prices, are ...

• Downwardly inflexible

• Upwardly inflexible

• Always flexible

According to Keynes, if an economy operating below full employment sees a further decrease in AD (shift inwards), this would cause...

• Deflation

• Unemployment

• Both deflation and unemployment

• A decrease in inflation