3.1 Aggregate Demand

Which of the following will shift the aggregate demand curve to the right?

• A report that corporate earnings were lower than expected

• An increase in interest rates caused by a tightening of monetary policy

• Increased imports caused by appreciation of the dollar

• Increased spending by businesses on computers

• An increase in the government’s budget surplus

Which of the following will most likely result from a decrease in government spending?

• An increase in output

• An increase in the price level

• An increase in employment

• A decrease in aggregate supply

• A decrease in aggregate demand

Which of the following statements best describes the impact of a decrease in Japanese income on aggregate demand in the United States?

• There will be no change in aggregate demand because United States aggregate demand depends only on the income of United States consumers.

• Aggregate demand will decrease because the demand for United States exports decreases.

• Aggregate demand will decrease because the value of the United States dollar decreases relative to the Japanese yen.

• Aggregate demand will increase because a decrease in income in Japan causes an increase in income in the United States.

• Aggregate demand will increase because interest rates in the United States decrease.

Which of the following changes would cause an economy’s aggregate demand curve to shift to the right?

• An increase in spending on imports

• An increase in autonomous consumption spending

• An increase in interest rates

• A decrease in the money supply

• A decrease in the overall price level in the economy

Under which of the following conditions would consumer spending most likely increase?

• Consumers have large unpaid balances on their credit cards.

• Consumers’ wealth is increased by changes in the stock market.

• The government encourages consumers to increase their savings.

• Social security taxes are increased.

• Consumers believe they will not receive pay increases next year.

When the government spends more, the initial effect is that

• aggregate demand shifts right

• aggregate demand shifts left

• aggregate supply shifts right

• aggregate supply shifts left

Aggregate demand shifts left when the government

• Decreases taxes

• Cuts military expenditures

• Both of the above are correct

• None of the above is correct

What does the vertical axis represent on the aggregate demand curve?

• Total Input
• Total Output
• Price Level
• Both A&B

What term best describes the total demand for final goods and services at a range of price levels during a stated period of time?

• Aggregate Supply
• Total Supply
• Total Demand
• Aggregate Demand

Which of the following is not a determinant of aggregate demand ?

• Change in Consumer Spending
• Change in Political Parties
• Change in Government Spending
• Change in investment Spending