Question 1

An increase in the price level shifts the aggregate demand curve to the left.

Accepted Answer

An increase in the price level leads to a decrease in the real money supply, which in turn leads to a decrease in aggregate demand. Therefore, the aggregate demand curve shifts to the left.

Question 2

An increase in exports decreases aggregate demand.

Accepted Answer

An increase in exports actually increases aggregate demand, as it represents an increase in spending from foreign countries.

Question 3

An increase in the price level causes a movement down the aggregate demand curve.

Accepted Answer

An increase in the price level causes a movement up along the aggregate demand curve, not down, as it decreases the quantity of goods and services demanded.

Question 4

If the U.S. dollar increases in value relative to other currencies, how does this affect the aggregate demand curve?
A) This will move the economy up along a stationary aggregate demand curve.
B) This will move the economy down along a stationary aggregate demand curve.
C) This will shift the aggregate demand curve to the left.
D) This will shift the aggregate demand curve to the right.

Accepted Answer

When the U.S. dollar increases in value relative to other currencies, U.S. exports become relatively more expensive, leading to a decrease in net exports. This, in turn, decreases aggregate demand, shifting the aggregate demand curve to the left.

Question 5

An increase in imports increases aggregate demand.

Accepted Answer

An increase in imports represents an outflow of funds from a country to purchase foreign goods and services, which actually decreases the domestic aggregate demand as it reduces the total spending on domestically produced goods and services.

Question 6

Using an aggregate demand graph, illustrate the impact of an increase in the interest rate.

Accepted Answer

The answer of Using an aggregate demand graph, illustrate the...

Question 7

Using an aggregate demand graph, illustrate the impact of an increase in the price level on aggregate demand.

Accepted Answer

The answer of Using an aggregate demand graph, illustrate the...

Question 8

Last week, 13 Mexican pesos could purchase one U.S. dollar. This week, it takes 11 Mexican pesos to purchase one U.S. dollar. This change in the value of the dollar will ________ exports from the United States to Mexico and ________ U.S. aggregate demand.
A) increase; increase
B) decrease; decrease
C) increase; decrease
D) decrease; increase

Accepted Answer

The answer of Last week, 13 Mexican pesos could purchase...

Question 9

A decrease in disposable income will shift the aggregate demand curve to the left.

Accepted Answer

When disposable income decreases, consumers have less money to spend on goods and services, causing a decrease in consumption. This leads to a decrease in aggregate demand, shifting the AD curve to the left.

Question 10

Suppose the U.S. GDP growth rate is slower relative to other countries' GDP growth rates. This will
A) move the economy up along a stationary aggregate demand curve.
B) move the economy down along a stationary aggregate demand curve.
C) shift the aggregate demand curve to the left.
D) shift the aggregate demand curve to the right.

Accepted Answer

The answer of Suppose the U.S. GDP growth rate is...

Question 11

Using an aggregate demand graph, illustrate the impact of an increase in the growth rate of U.S. GDP relative to the growth rate of foreign GDP.

Accepted Answer

The answer of Using an aggregate demand graph, illustrate the...

Question 12

President Trump has proposed lowering income taxes for individuals. Explain how lower income taxes affect the aggregate demand curve.

Accepted Answer

The answer of President Trump has proposed lowering income taxes...

Question 13

How do changes in income tax policies affect aggregate demand?
A) Higher taxes increase disposable income, consumption, and aggregate demand.
B) Higher taxes reduce disposable income, consumption, and aggregate demand.
C) Higher taxes increase corporate investment and aggregate demand.
D) Higher taxes increase aggregate supply and thus increase aggregate demand as well.

Accepted Answer

When income tax policies increase taxes, individuals have less disposable income to spend on consumption. This decrease in consumption leads to a decrease in aggregate demand. Therefore, higher taxes reduce disposable income, consumption, and aggregate demand.

Question 14

While in office, President Obama discussed raising income taxes for individuals earning over $250,000 in income. Explain how these higher income taxes would affect the aggregate demand curve.

Accepted Answer

The answer of While in office, President Obama discussed raising...

Question 15

Explain how each of the following events would affect the aggregate demand curve.
a. Lower interest rates
b. A decrease in net exports
c. A decrease in the price level
d. Slower income growth in other countries
e. A decrease in imports

Accepted Answer

The answer of Explain how each of the following events...

Question 16

Japanese electronics exports were hurt in 2008 as a result of the recession. How would this decrease in exports have affected Japan's aggregate demand curve?
A) The aggregate demand curve would have shifted to the right.
B) The aggregate demand curve would not have shifted, but there would have been a movement up the aggregate demand curve.
C) The aggregate demand curve would not have shifted, but there would have been a movement down the aggregate demand curve.
D) The aggregate demand curve would have shifted to the left.

Accepted Answer

A decrease in exports would lead to a decrease in net exports, causing a decrease in aggregate demand. As a result, the aggregate demand curve would shift to the left.

Question 17

Explain the three reasons the aggregate demand curve slopes downward.

Accepted Answer

The answer of Explain the three reasons the aggregate demand...

Question 18

An increase in disposable income will shift the aggregate demand curve to the right.

Accepted Answer

An increase in disposable income means that consumers have more money to spend, leading to an overall increase in consumption. This results in an increase in aggregate demand, shifting the curve to the right.

Question 19

If aggregate demand just decreased, which of the following may have caused the decrease?
A) a decrease in exports
B) a decrease in the interest rate
C) a decrease in the price level
D) a decrease in imports

Accepted Answer

A decrease in exports would lead to a decrease in aggregate demand because it leads to a decrease in the amount spent within a country's economy. A decrease in interest rates would likely lead to an increase in aggregate demand because it encourages borrowing and spending. A decrease in the price level may actually lead to an increase in aggregate demand because it makes goods and services more affordable, but it would depend on other factors such as income levels. A decrease in imports would likely have a neutral or positive effect on aggregate demand because it would increase the amount spent within a country's economy.

Question 20

In September of 2007, the Federal Reserve Board Open Market Committee voted to lower interest rates for the first time that year. Explain how lower interest rates affect the aggregate demand curve.

Accepted Answer

The answer of In September of 2007, the Federal Reserve...

Quiz 24: Aggregate Demand and Aggregate Supply Analysis

An increase in the price level shifts the aggregate demand curve to the left.

An increase in exports decreases aggregate demand.

An increase in the price level causes a movement down the aggregate demand curve.

If the U.S. dollar increases in value relative to other currencies, how does this affect the aggregate demand curve?

An increase in imports increases aggregate demand.

Using an aggregate demand graph, illustrate the impact of an increase in the interest rate.

Using an aggregate demand graph, illustrate the impact of an increase in the price level on aggregate demand.

Last week, 13 Mexican pesos could purchase one U.S. dollar. This week, it takes 11 Mexican pesos to purchase one U.S. dollar. This change in the value of the dollar will exports from the United States to Mexico and U.S. aggregate demand.

A decrease in disposable income will shift the aggregate demand curve to the left.

Suppose the U.S. GDP growth rate is slower relative to other countries' GDP growth rates. This will

Using an aggregate demand graph, illustrate the impact of an increase in the growth rate of U.S. GDP relative to the growth rate of foreign GDP.

President Trump has proposed lowering income taxes for individuals. Explain how lower income taxes affect the aggregate demand curve.

How do changes in income tax policies affect aggregate demand?

While in office, President Obama discussed raising income taxes for individuals earning over $250,000 in income. Explain how these higher income taxes would affect the aggregate demand curve.

Explain how each of the following events would affect the aggregate demand curve. a. Lower interest rates b. A decrease in net exports c. A decrease in the price level d. Slower income growth in other countries e. A decrease in imports

Japanese electronics exports were hurt in 2008 as a result of the recession. How would this decrease in exports have affected Japan's aggregate demand curve?

Explain the three reasons the aggregate demand curve slopes downward.

An increase in disposable income will shift the aggregate demand curve to the right.

If aggregate demand just decreased, which of the following may have caused the decrease?

In September of 2007, the Federal Reserve Board Open Market Committee voted to lower interest rates for the first time that year. Explain how lower interest rates affect the aggregate demand curve.