Rigorous Economics Aggregate Demand And Supply Test - 90+ MCQs: Economics - Aggregate Demand and Supply Quiz: Assess Your Understanding with Comprehensive Questions and Answers - Economics Aggregate Demand And Supply Test

1. Examine the impact of a trade surplus on Aggregate Demand and Supply.

A trade surplus increases both Aggregate Demand and Supply

A trade surplus decreases Aggregate Demand but increases Aggregate Supply

A trade surplus has no impact on Aggregate Demand and Supply

A trade surplus decreases both Aggregate Demand and Supply

2. How do changes in the global economy, such as recessions in major trading partners, affect Aggregate Demand?

Increase in Aggregate Demand

Decrease in Aggregate Demand

No effect on Aggregate Demand

Increase in Aggregate Supply

3. What happens to Aggregate Supply in the short run when there is a favorable supply shock?

Increases

Decreases

Remains unchanged

Becomes vertical

4. What is the role of the central bank in conducting monetary policy?

To control government spending and taxation.

To regulate financial markets and institutions.

To manage the country's foreign exchange reserves.

To control the money supply and interest rates.

5. What does the Aggregate Supply curve represent?

Total quantity of goods and services supplied at different price levels

Total quantity of goods and services demanded at different price levels

Total revenue generated at different price levels

Total cost of production at different price levels

6. Examine the relationship between interest rates and Aggregate Demand.

Higher interest rates increase Aggregate Demand

Higher interest rates decrease Aggregate Demand

Interest rates have no impact on Aggregate Demand

Interest rates only affect Aggregate Supply

7. What does the term 'liquidity trap' refer to in macroeconomics?

A situation where interest rates are very high.

A situation where interest rates are very low and savings become unresponsive to further changes.

A situation where inflation rates exceed economic growth rates.

A situation where the central bank loses control over monetary policy.

8. Examine the impact of changes in international trade policies on Aggregate Supply.

International trade policies have no impact on Aggregate Supply

Changes in trade policies can influence production costs and impact Aggregate Supply

International trade policies only affect Aggregate Demand

Changes in trade policies only affect consumer confidence

9. How does government intervention impact Aggregate Demand and Supply?

Government intervention has no impact on Aggregate Demand and Supply

Government spending can influence Aggregate Demand

Government policies affect only Aggregate Supply

Government intervention only affects Aggregate Demand

10. Which of the following is a shift factor for the Aggregate Supply curve?

Changes in production technology

Changes in consumer preferences

Changes in government spending

Changes in income levels

11. What is the impact of a decrease in taxes on Aggregate Demand?

Aggregate Demand increases

Aggregate Demand decreases

Aggregate Supply increases

Aggregate Supply decreases

12. Discuss the role of the central bank in influencing Aggregate Demand.

The central bank has no role in influencing Aggregate Demand

Central bank policies can impact interest rates and money supply, influencing Aggregate Demand

Central bank only influences Aggregate Supply

Central bank actions affect only consumer confidence

13. What does the Aggregate Demand curve slope downward?

Due to the wealth effect

Due to changes in production costs

Due to changes in foreign exchange rates

Due to changes in technology

14. What is the primary goal of contractionary monetary policy?

To increase government spending.

To decrease the money supply and reduce inflation.

To increase the money supply and stimulate economic growth.

To maintain a fixed exchange rate.

15. What does the concept of 'stagflation' refer to?

High inflation and stagnant economic growth

Low inflation and rapid economic growth

High unemployment and rapid economic growth

Low unemployment and stagnant economic growth

16. Explain the Phillips curve and its relation to Aggregate Supply and Demand.

The Phillips curve shows the relationship between inflation and unemployment

The Phillips curve depicts the impact of government spending on Aggregate Supply

The Phillips curve explains the link between interest rates and Aggregate Demand

The Phillips curve is unrelated to Aggregate Supply and Demand

17. Which of the following is considered an automatic stabilizer in fiscal policy?

Government regulations on business activities.

Tax revenues that automatically increase during economic expansions.

Discretionary spending on infrastructure projects.

Central bank interventions in financial markets.

18. Which of the following is an example of a fiscal policy action?

Increasing government spending on infrastructure

Changing interest rates

Buying government securities

Open market operations

19. What is the role of the Federal Reserve in the United States regarding monetary policy?

Executing fiscal policy

Regulating international trade

Managing government spending

Conducting monetary policy

20. Which of the following is a component of Aggregate Demand?

Government spending

Imports

Investment

Exports

21. What happens to the equilibrium price level when Aggregate Demand decreases?

Price level decreases

Price level increases

Price level remains unchanged

Price level becomes unpredictable

22. Which of the following is a tool of fiscal policy used to combat a recession?

Increasing government spending

Raising interest rates

Selling government securities

Reducing money supply

23. How does an increase in the value of a country's currency affect its exports?

An increase in the value of the currency makes exports more expensive and reduces them.

An increase in the value of the currency has no effect on exports.

An increase in the value of the currency makes exports cheaper and increases them.

An increase in the value of the currency increases the cost of imports.

24. Which of the following is a primary tool of expansionary fiscal policy?

Decreasing government spending.

Increasing taxes.

Reducing the money supply.

Increasing government spending.

25. What does the Aggregate Supply curve look like in the long run?

Vertical

Horizontal

Downward-sloping

Upward-sloping

26. What is the primary determinant of consumption in the AD-AS model?

Interest rates

Disposable income

Government spending

Foreign exchange rates

27. What is the primary goal of monetary policy in influencing Aggregate Demand?

Stabilizing prices and controlling inflation

Promoting economic growth and full employment

Redistributing income and wealth

Regulating international trade

28. In the long run, the Aggregate Supply curve is primarily influenced by changes in:

Nominal wages

Consumer spending

Interest rates

Government regulations

29. What is the equilibrium in the AD-AS model?

Point where Aggregate Demand equals Aggregate Supply

Point where consumer demand equals producer supply

Point where prices are highest

Point where prices are lowest

30. Discuss the impact of a recession on Aggregate Demand and Supply.

A recession increases both Aggregate Demand and Supply

A recession decreases Aggregate Demand but increases Aggregate Supply

A recession has no impact on Aggregate Demand and Supply

A recession decreases both Aggregate Demand and Supply

Economics - Aggregate Demand and Supply MCQ Test 3