Q1 :

With respect to the slope of the aggregate demand curve, the net export effect is caused by:

a) the negative relationship between the price level and imports.

b) the negative relationship between the price level and exports minus imports.

c) the negative relationship between the price level and exports plus imports.

d) the positive relationship between the price level and exports minus imports.

e) the negative relationship between the price level and exports.

Q2:

If an economy is operating along the Keynesian (horizontal) section of the aggregate supply curve, an increase in aggregate demand will result in:

a) no change in the price level and an increase in unemployment.

b) no change in the price level and a decrease in unemployment.

c) a decrease in the price level and a decrease in unemployment.

d) an increase in inflation and an increase in nominal GDP.

e) an increase in inflation and an increase in real GDP.

Q3:

Which of the following will shift the aggregate demand curve to the right?

a) An increase in imports.

b) A fall in the inflation rate.

c) Consumers becoming more pessimistic about the future.

d) An increase in business optimism.

e) A decrease in government spending.

Q4

Which one of the following is likely to cause cost-push inflation?

a) A fall in the price of oil.

b) Higher wages negotiated by unions.

c) Open market purchases of government securities by the RBA.

d) A decrease in government purchases of goods and services.

e) Open market sales of government securities by the RBA.