Practice Questions
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What effect does an increase in consumer confidence have on the aggregate demand curve?
When people feel confident about their jobs and money, they spend more. Other options are incorrect because Some might think that more confidence mean...
How would a significant increase in government spending, as part of fiscal policy, likely affect aggregate demand if it coincides with an external shock such as a natural disaster?
When the government spends a lot of money, it puts more cash into the economy. Other options are incorrect because Some might think that spending less...
How does an increase in aggregate demand, driven by economic growth, affect the equilibrium price in a market?
When more people want to buy goods and services, sellers can raise prices. Other options are incorrect because Some might think that more demand means...
How do changes in economic indicators influence the effectiveness of monetary policy in promoting economic growth?
When economic indicators are positive, it means things like jobs and spending are doing well. Other options are incorrect because Some might think eco...
How does an increase in aggregate demand, influenced by positive economic indicators, affect the equilibrium price and overall price level in an economy?
When more people want to buy goods and services, prices go up. Other options are incorrect because Some might think that higher demand means lower pri...
What happens to the aggregate demand curve when consumer confidence increases?
When people feel good about the economy, they spend more money. Other options are incorrect because Some might think that more confidence means less d...
What happens to the aggregate supply curve when production costs decrease due to technological advancements?
When production costs go down, businesses can make more goods for less money. Other options are incorrect because Some might think lower costs mean le...
What effect does an increase in consumer confidence have on the aggregate demand curve?
When people feel good about the economy, they spend more money. Other options are incorrect because Some might think that more confidence means less d...
If an increase in aggregate demand is to rising inflation as a decrease in aggregate supply is to what economic outcome?
When supply goes down, fewer goods are made. Other options are incorrect because Some might think less supply means lower prices; People may believe t...
If an economy experiences a sudden increase in aggregate demand, which of the following outcomes is most likely to occur in the short run?
When demand goes up, businesses need more workers to make more products. Other options are incorrect because This option suggests that more people wou...
If an economy experiences a decrease in aggregate demand, what is the likely immediate effect on unemployment and inflation?
When people buy less, businesses make less money. Other options are incorrect because This answer suggests that fewer purchases lead to more jobs and ...
Country Y recently experienced a significant increase in consumer spending, leading to a rise in aggregate demand. As a result, policymakers predict a decrease in unemployment but are concerned about rising inflation. Based on the concepts of aggregate demand and supply, which of the following outcomes is most likely to occur in the short run?
When people spend more money, businesses sell more. Other options are incorrect because This suggests that spending doesn't affect jobs, which isn't t...
Which of the following statements accurately describe the effects of a rightward shift in aggregate demand on unemployment and inflation? Select all that apply.
A rightward shift in aggregate demand usually leads to higher inflation and lower unemployment in the short term. Other options are incorrect because ...
If aggregate demand increases significantly, what is the likely short-term effect on unemployment and inflation in an economy experiencing a Phillips curve trade-off?
When people buy more goods and services, businesses need to hire more workers. Other options are incorrect because This answer suggests that more dema...
An increase in aggregate demand typically results in a(n) ______ in inflation and a(n) ______ in unemployment in the short run.
When people want to buy more goods and services, businesses raise prices. Other options are incorrect because Some might think that more demand means ...
Arrange the following economic scenarios in the correct order of their impact on unemployment and inflation, considering a shift in aggregate demand: A) Increase in consumer spending B) Shift of aggregate demand curve to the right C) Decrease in unemployment D) Rise in inflation
When people spend more, it increases demand for goods. Other options are incorrect because This option suggests that unemployment decreases before dem...
If aggregate demand increases while short-run aggregate supply remains constant, what is the likely effect on the Phillips curve?
When demand goes up, businesses hire more workers to meet the demand. Other options are incorrect because This option suggests that more demand leads ...
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