Economics Quiz - Aggregate Demand

What is the definition of Aggregate Demand?

• The total sum of all demands and expenditures in the economy at any given price.

• The total sum of all goods and services produced in the economy.

• The total income of a nation.

• The total sum of all savings in the economy.

Aggregate Demand is a measure of which of the following?

• Consumer Confidence

• National Income

• Unemployment Rate

• Inflation Rate

What is the formula for calculating National Income or Aggregate Demand (AD)?

What does 'C' stand for in the formula for Aggregate Demand?

How is Consumption defined in economics?

• Spending on consumer goods and services

• The total savings of consumers

• The investment made by consumers

• The amount of goods and services imported by consumers

What is saving defined as in the context of income?

• The amount of income spent on consumer durables

• The amount of income spent on consumables

• What is not spent out of income

• The amount of income spent on services

When discussing income in the provided material, what type of income is being referred to?

• Gross income

• Net income

• Disposable income

• Adjusted income

What is the most important factor in determining the amount of consumption according to the material?

• Total income

• Disposable income

• Savings

• Investment

What is the formula for Marginal Propensity to Consume (MPC)?

• MPC = Change in Savings / Change in Income

• MPC = Change in Consumption / Change in Savings

• MPC = Change in Income / Change in Consumption

• MPC = Change in Consumption / Change in Income

Calculate the MPC of a household if its income (Y) rises by £5000 per year and they spend £4500 of their extra income.

• 0.9

• 0.8

• 1.0

• 0.7