Exam 8: Aggregate Demand

A) an optimistic business forecast of future profits
B) a tax increase
C) an increase in consumer confidence
D) decreased consumer wealth

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A) an increase in investment, combined with an increase in imports
B) the discovery of new, profitable, technological investment opportunities, combined with inventory levels that have fallen below desired levels
C) a reduction in business expectations, combined with the imposition of new tariffs by major trading partners
D) faster growth rates by a major trading partner, combined with an increase in stock market wealth

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A) It will decrease money demand in Canada.
B) It will increase real GDP demanded in Canada.
C) It will increase Canadian exports.
D) It will increase Canadian imports.

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A) AD would increase.
B) AD could either increase or decrease.
C) AD would be unaffected.
D) AD would decrease.

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A) a decrease in private saving and a decrease in investment
B) a decrease public saving and a decrease in investment
C) an increase in private saving and an increase in investment
D) an increase in public saving and an increase in investment

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A) rising price levels
B) a decrease in interest rates
C) a fall in business confidence
D) a tax increase

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A) The demand for domestic goods will increase, resulting in an increase in the quantity of real GDP demanded.
B) The demand for domestic goods will increase, resulting in a decrease in the quantity of real GDP demanded.
C) The demand for domestic goods will decrease, resulting in an increase in the quantity of real GDP demanded.
D) The demand for domestic goods will decrease, resulting in a decrease in the quantity of real GDP demanded.

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A) an increase in government purchases, combined with a decrease in investment
B) faster growth rates by a major trading partner, combined with an increase in stock market wealth
C) an increase in consumption, combined with an increase in exports
D) an increase in business tax rates, combined with a decrease in consumer confidence

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A) business inventories that have risen far above desired levels
B) business expectations of lower future sales and profits
C) an increase in real interest rates
D) higher business taxes

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A) It is the ability to easily enter a marketplace if there is the potential for profit or exit from it if the business is not successful.
B) People are allowed to trade with anyone, anywhere, anytime.
C) If prices of the goods and services in the domestic market rise relative to those in global markets due to a higher domestic price level, consumers and businesses will buy more from foreign producers and less from domestic producers, other things being equal.
D) If prices of the goods and services in the domestic market rise relative to those in global markets due to a higher domestic price level, consumers and businesses will buy less from foreign producers and more from domestic producers.

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A) It would rise by $6000 if her APC was equal to 0.6.
B) It would fall by $6000 if her APC was equal to 0.6.
C) It would rise by $6000 if her MPC was equal to 0.6.
D) It would fall by $6000 if her MPC was equal to 0.6.

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A) decreased business taxes
B) higher interest rates
C) pessimistic business forecasts
D) an increase in inventory levels

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A) as the total spending by all consumers, business firms, governments, and foreigners in Canada
B) as the total amount that all consumers, business firms, governments, and foreigners wish to spend on all final goods and services at various price levels
C) as the total spending by consumers, business firms, and governments in one year
D) as the total spending by consumers, business firms, and governments on final goods and services

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A) an increase in investment spending
B) a decrease in investment spending
C) an increase in consumption spending
D) no change in either consumption or investment spending

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A) AD would increase.
B) AD would decrease.
C) AD could either increase or decrease, depending on which change was of a greater magnitude.
D) AD would stay the same.

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A) as the proportion of any change in disposable income that becomes a change in consumption
B) as the proportion of any change in disposable income that does not become a change in consumption
C) as the fraction of total disposable income that households do not spend on consumption
D) as the fraction of total disposable income that households spend on consumption

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A) It will decrease aggregate demand.
B) It will leave consumers with more disposable income.
C) It will leave consumers with less disposable income.
D) It will increase aggregate supply.

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