01
True or false
1 point
True or false: At potential output, an economy can still have frictional and structural unemployment.
Free Practice Quiz Question List
Aggregate Demand, Aggregate Supply, and Macroeconomic Fluctuations Online Quiz Questions
Use this free practice quiz with 20 questions to review Aggregate Demand, Aggregate Supply, and Macroeconomic Fluctuations, test your knowledge, and prepare for your next test or exam.
20 questions
02
Choose one
1 point
Which statement best defines aggregate demand?
- A
The total quantity of goods and services firms are willing to produce at different price levels
- B
The total quantity of domestically produced final goods and services that households, firms, governments, and foreign buyers plan to purchase at different price levels
- C
The total value of all intermediate and final goods produced by domestic firms
- D
The economy's sustainable maximum output when unemployment is zero
03
Written response
1 point
A sharp increase in oil prices raises firms' per-unit production costs. Which aggregate-supply curve initially shifts left?
04
Fill in the blank
1 point
Complete the aggregate-demand identity: AD = C + I + + (X - M). Enter the single letter used for government purchases.
05
Choose one
1 point
Economic activity reaches a temporary high point before beginning to decline. Which stage of the business cycle is this?
- A
Peak
- B
Trough
- C
Expansion
- D
Contraction
06
Fill in the blank
1 point
A sudden supply disruption shifts SRAS left, causing the price level to rise while real GDP falls. This combination is called .
07
True or false
1 point
True or false: The NBER's official definition of a recession is exactly two consecutive quarters of declining real GDP.
- A
True
- B
False
08
Written response
1 point
An economy exports goods and services worth 80 units and imports goods and services worth 95 units. What are its net exports, calculated as exports minus imports?
09
Choose all
1 point
Which changes can shift long-run aggregate supply to the right? Select all correct choices.
- A
A sustained increase in the working-age population or labor-force participation
- B
A temporary increase in consumer confidence
- C
An improvement in worker education and skills
- D
Technological progress that raises productivity
- E
A permanent reduction in the economy's capital stock
10
Choose one
1 point
An economy is operating below potential output with elevated cyclical unemployment. Which policy response is most directly intended to reduce this recessionary gap?
- A
Increase aggregate demand through expansionary fiscal or monetary policy
- B
Reduce aggregate demand through contractionary fiscal or monetary policy
- C
Shift aggregate demand left by reducing government purchases
- D
Reduce potential output to eliminate the gap
11
Choose all
1 point
Which developments would generally shift aggregate demand to the right through higher consumption or investment? Select all correct choices.
- A
A decrease in personal taxes
- B
Greater consumer confidence about future income
- C
A higher household debt burden
- D
Lower interest rates
- E
A decline in household wealth
12
Open ended
1 point
Explain how a permanent improvement in productivity affects SRAS, LRAS, short-run equilibrium real GDP, the price level, and long-run productive capacity. State the direction of each effect under the standard assumption that aggregate demand is unchanged.
13
Choose one
1 point
In which SRAS zone would a further increase in aggregate demand mainly raise the price level because the economy is near or at potential output?
- A
Keynesian zone
- B
Intermediate zone
- C
Classical or neoclassical zone
- D
Recessionary zone
14
Choose one
1 point
Which change most directly shifts long-run aggregate supply to the right?
- A
A decrease in consumer confidence
- B
A sustained increase in the labor force
- C
A temporary fall in household spending
- D
An increase in the economy-wide price level
15
Choose one
1 point
An economy has consumption of 450, investment of 180, government purchases of 220, exports of 90, and imports of 140, all measured in billions of dollars. What is aggregate demand according to the expenditure identity?
- A
700
- B
750
- C
800
- D
1,080
16
Choose one
1 point
Holding other factors constant, what happens in the AD–AS model when the overall price level rises?
- A
A movement along the AD curve to a lower quantity of real GDP demanded
- B
A rightward shift of the AD curve
- C
A leftward shift of the AD curve
- D
A rightward shift of the LRAS curve
17
True or false
1 point
True or false: Transfer payments are included directly in government purchases in the aggregate-demand identity.
- A
True
- B
False
18
Choose one
1 point
Households become substantially more pessimistic about their future income and reduce current consumption. What is the most likely short-run result?
- A
AD shifts right, raising real GDP and lowering unemployment
- B
SRAS shifts left, lowering real GDP and raising the price level
- C
AD shifts left, lowering real GDP and increasing unemployment
- D
LRAS shifts right, increasing potential output immediately
19
Written response
1 point
Calculate aggregate demand when consumption is 520 billion dollars, investment is 160 billion dollars, government purchases are 210 billion dollars, exports are 130 billion dollars, and imports are 220 billion dollars. Enter the result in billions of dollars.
20
Written response
1 point
What is the economics term for a situation in which equilibrium real GDP is above potential output and the economy is operating beyond its sustainable normal capacity?