Macroeconomics Quiz

Aggregate Demand is represented by which formula?

• A) C + I + G + X -M

• B) C + I + X + X-M

• C) I + X + X-M

• D) C + M + X

Demand pull inflation arises from:

• A) Increased cost of raw materials.

• B) An overall increase in demand.

• C) Decrease in consumer spending.

• D) Reduced labor costs.

Cost push inflation is primarily caused by:

• A) A surge in consumer demand.

• B) Decreased taxation.

• C) An increase in production costs.

• D) Increased government spending.

The SRAS curve illustrates:

• A) The long-term potential output of an economy.

• B) The quantity of output firms are willing to produce at a given price in the short run.

• C) The level of output in the shortrun when the economy to cope with changes in AD

• D) The effect of expansionary fiscal policy.

The LRAS curve is:

• A) A representation of short-run output fluctuations.

• B) Depictive of the economy's output when at full capacity.

• C) A reflection of temporary economic changes.

• D) Determined by short-term supply shocks.

When there's a significant spare capacity in the economy, expansionary fiscal policy is:

• A) Less effective and more inflationary.

• B) More effective and more inflationary.

• C) Less effective and less inflationary.

• D) More effective and less inflationary.

The Keynesian viewpoint suggests that expansionary fiscal policy in an economy with spare capacity:

• A) Creates growth with inflationary pressures.

• B) Reduces growth without inflationary pressures.

• C) Creates growth without inflationary pressures.

• D) Has no significant impact on growth or inflation.

Which of the following is NOT a component of Aggregate Demand?

• A) Consumption (C)

• B) Investment (I)

• C) Exports (X)

• D) Spare capacity

An outward shift in the aggregate demand curve when there's spare capacity in the economy:

• A) Increases inflation rate significantly.

• B) Reduces short-run growth.

• C) Puts little pressure on the inflation rate to increase.

• D) Decreases overall demand.

In the formula C + I + X + X-M, what does "M" represent?

• A) Money supply

• B) Marginal propensity to consume

• C) Imports

• D) Monetary policy