Question 1
A rise in consumer confidence shifts:
A.
SRAS left only B.
AD to the right C.
LRAS left D.
PPF inward
Question 2
What is meant by movement along ad?
A.
Lower PL → lower interest rates → more I and C. B.
Caused by a change in the average price level. C.
Spending not determined by current income. D.
Total planned spending in the economy at each average price level.
Question 3
What is meant by aggregate demand (ad)?
A.
Caused by a change in the average price level. B.
Lower price level raises real wealth → more consumption. C.
Spending not determined by current income. D.
Total planned spending in the economy at each average price level.
Question 4
What is meant by bank rate?
A.
Total planned spending in the economy at each average price level. B.
Lower PL → exports more competitive, imports less attractive. C.
Interest rate set by the Bank of England for lending to banks. D.
Caused by a change in the average price level.
Question 5
What is meant by real balance effect?
A.
Lower price level raises real wealth → more consumption. B.
Caused by a change in the average price level. C.
C + I + G + (X − M). D.
Lower PL → exports more competitive, imports less attractive.
Question 6
What is meant by shift of ad?
A.
Caused by a change in the average price level. B.
Total planned spending in the economy at each average price level. C.
Caused by change in C, I, G, X or M at each price level. D.
Lower PL → exports more competitive, imports less attractive.
Question 7
What is meant by autonomous spending?
A.
Lower PL → lower interest rates → more I and C. B.
Spending not determined by current income. C.
Includes net trade component. D.
C + I + G + (X − M).
Question 8
Aggregate demand is:
A.
Government spending only B.
Exports only C.
C + I + G + (X − M) D.
C + S + T
Question 9
The net export effect means lower PL leads to:
A.
Higher imports only B.
Higher interest rates C.
More competitive exports D.
Lower consumption always
Question 10
Movement along AD is caused by:
A.
A change in the average price level B.
Immigration only C.
Higher government spending D.
Technology improvement
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