Aggregate Demand

Which one of the following is most likely to result in an increase in the long-run trend rate of

economic growth?

• An increase in aggregate demand leading to inflationary pressures

• A sustained increase in the value of the pound on the foreign exchange market

• A reduction in taxes which increases risk-taking and incentives to work

• A sustained reduction in both inflation and labour productivity.

A change in any of the following factors could cause the aggregate demand curve to shift except:

• fiscal policy

• expectations

• monetary policy

• price level

Which of the following would NOT cause a shift in AD?

• A reduction in income tax

• A reduction in interest rates

• An increase in government spending

• A fall in the cost of production

All of the following can shift aggregate supply, except

• Supply shocks from trading partners

• Increased business taxes

• Changes in the price level

• an innovation in technology

Which of the following is most likely to occur if (X-M) shows more exports than imports?

• Depreciation of currency, Shift of AD to the left

• Depreciation of currency, Shift of AD to the right

• Appreciation of currency, Shift of AD to the right

• Appreciation of currency, Shift of AD to the left

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

If the dollar appreciates(increases in value) because of speculation or government policy, the U.S. net exports

• increase and aggregate demand shifts right

• increase and aggregate demand shifts left

• Decrease and aggregate demand shifts right

• Decrease and aggregate demand shifts left

Which one of the following is most likely to lead to a fall in aggregate investment?

• A reduction in the level of unemployment

• An increase in spare capacity in the economy

• A reduction in the average level of interest rates

• An increase in aggregate demand

If the price level rises, then:

• real wealth increases, consumption decreases, and aggregate demand decreases.

• real wealth decreases, consumption decreases, and aggregate demand decreases.

• real wealth increases, consumption increases, and aggregate demand increases.

• real wealth decreases, consumption increases, and aggregate demand increases.

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