The relationship between the aggregate price level and the quantity of aggregate output demanded by households, businesses, the government, and the rest of the world is represented by the _____ demand.

a. simple

b. market

c. surplus

d.aggregate

The marginal propensity to consume is the increase in consumer spending when disposable income increases by $1.

a. False

b.True

The government saves when it runs a budget deficit.

a. True

b.False

Most economists believe that the government should balance the budget on average, allowing deficit years when the economy is in recession to be offset by surpluses during years of expansion.

a. True

b.False

A(n) _____ will shift the aggregate demand curve.

a. interest rate effect of an aggregate price level change

b. demand shock

c. demand expectation

d.wealth effect of an aggregate price level change

If expected GDP increases, then current planned investment will increase.

a. False

b.True

Some economists argue that when a government tries too hard to stabilize the economy through fiscal or monetary policy, it can end up making the economy less stable.

a. True

b.False

The marginal propensity to consume is consumption divided by disposable income.

a. False

b.True

The aggregate supply curve shows the relationship between the _____ and the quantity of aggregate output supplied.

a. price of money

b. price of oil

c. level of employment

d.aggregate price level

Which index includes smaller companies, many in the technology sector?

a. the S&P 500

b. the producer price index

c. the Dow Jones Industrial Average

d. the NASDAQ

Changes in the budget balance may be the result of economic policy, or they may be caused by fluctuations in the economy.

a. True

b.False