Multiple Choice Questions:
1. A decrease in the U.S. price level will
a. Increase U.S. exports.
b. Increase U.S. imports.
c. Increase RGDP demanded in the United States.
d. Do both a and c.
e. Do both b and c.
2. An economic bust or severe downturn in the Japanese economy will likely result in a(n)
a. Decrease in U.S. exports and U.S. aggregate demand.
b. Increase in U.S. exports and U.S. aggregate demand.
c. Decrease in U.S. imports and U.S. aggregate demand.
d. Increase in U.S. imports and U.S. aggregate demand.
3. Which of the following will cause consumption and, as a result, aggregate demand to decrease?
a. A tax increase
b. A fall in consumer confidence
c. Reduced stock market wealth
d. Rising levels of consumer debt
e. All of the above
4. A massive increase in interstate highway construction will affect aggregate demand through which sector? Will this change increase or decrease aggregate demand?
a. Investment, increase
b. Government purchases, increase
c. Government purchases, decrease
d. Consumption, decrease
5. An increase in government purchases, combined with a decrease in investment, would have what effect on aggregate demand?
a. AD would increase.
b. AD would decrease.
c. AD would stay the same.
d. AD could either increase or decrease, depending on which change was of greater magnitude.
6. An increase in consumption, combined with an increase in exports, would have what effect on aggregate demand?
a. AD would increase.
b. AD would decrease.
c. AD would stay the same.
d. AD could either increase or decrease, depending on which change was of greater magnitude.
7. What would happen to aggregate demand if the federal government increased military purchases and state and local governments decreased their road-building budgets at the same time?
a. AD would increase because only federal government purchases affect AD.
b. AD would decrease because only state and local government purchases affect AD.
c. AD would increase if the change in federal purchases was greater than the change in state and local purchases.
d. AD would decrease if the change in federal purchases was greater than the change in state and local purchases.
8. If exports and imports both decrease, but exports decrease more than imports,
a. AD would decrease.
b. AD would increase.
c. AD would be unaffected.
d. AD could either increase or decrease.