1)If the aggregate supply increases, the ________.

Select one:

a.price level in an economy rise

b.demand would stay the same.

c.price level in an economy falls

Incorrect. Revisit the AD-AS curve, with this scenario the price level would rise.

d.real GDP decreases

2)If the government saw that consumer confidence was low, what step can it take to shift the AD to the right?

Select one:

a.Congress can pass tax cuts.

b.The local government could cut social programs.

c.The Federal Reserve can increase interest rates.

Incorrect. This would typically reduce the ability for consumption and business spending.

d.Government can decrease its spending.

3)In macroeconomics, ________ denotes the total quantity of output or the real GDP of what companies produce and sell.

Select one:

a.aggregate supply (AS)

b.potential GDP

c.aggregate demand (AD)

Incorrect. This represents total spending on a nation's domestic output of goods and services

d.the Consumer Price Index

4)In macroeconomics, ________ denotes the total quantity of output or the real GDP of what companies produce and sell.

Select one:

a.aggregate supply (AS)

b.potential GDP

c.aggregate demand (AD)

Incorrect. This represents total spending on a nation's domestic output of goods and services

d.the Consumer Price Index

5)Shifts in the aggregate supply curve can be caused by

Select one:

a.the wealth effect.

b.a change in input prices.

c.the exchange rate effect

d.the interest rate effect.

Incorrect. This is one of the reasons for the downward sloping aggregate demand curve.

6)What might shift aggregate demand?

Select one:

a.technological innovation

b.raw materials

Incorrect. These are shifters for aggregate supply.

c.production inputs

d.loss of business confidence

7) An increase in foreign prices relative to the price level in the U.S. will cause:

Select one:

a.the GDP deflator to move.

b.U.S. net exports to rise.

c.U.S. aggregate demand to fall.

d.U.S. net exports to fall.

Incorrect. This scenario would typically happen when there is an increase in U.S. prices relative to the price level in foreign countries.

7)As interest rates rise, the effect on aggregate demand is to

Select one:

a.reduce consumer borrowing and consumption spending.

b.increase consumer borrowing and saving.

c.increase only firm borrowing.

d.increase firm borrowing and investment spending.

Incorrect. When interest rates rise, this makes products more expensive and would not increase borrowing and investment.