Tackle the Test: Multiple-Choice Questions

1. Question

   Which of the following explains the slope of the aggregate demand curve?

   
   

   
   

   1. the wealth effect of a change in the aggregate price level

      
      
   
   

   2. the interest rate effect of a change in the aggregate price level

      
      
   
   

   3. the product-substitution effect of a change in the aggregate price level

      
      
   
   

   A.

   I only

   B.

   II only

   C.

   III only

   D.

   I and II only

   E.

   I, II, and III

   Which of the following explains the slope of the aggregate demand curve?

2. Question

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

   A.

   a decrease in wealth

   B.

   pessimistic consumer expectations

   C.

   a decrease in the existing stock of capital

   D.

   contractionary fiscal policy

   E.

   a decrease in the quantity of money

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

3. Question

   The Consumer Confidence Index is used to measure which of the following?

   A.

   the level of consumer spending

   B.

   the rate of return on investments

   C.

   consumer expectations

   D.

   planned investment spending

   E.

   the level of current disposable income

   The Consumer Confidence Index is used to measure which of the following?

4. Question

   Decreases in the stock market decrease aggregate demand by decreasing which of the following?

   A.

   consumer wealth

   B.

   the price level

   C.

   the stock of existing physical capital

   D.

   interest rates

   E.

   tax revenues

   Decreases in the stock market decrease aggregate demand by decreasing which of the following?

5. Question

   Which of the following government policies will shift the aggregate demand curve to the left?

   A.

   a decrease in the quantity of money

   B.

   an increase in government purchases of goods and services

   C.

   a decrease in taxes

   D.

   a decrease in interest rates

   E.

   an increase in government transfers

   Which of the following government policies will shift the aggregate demand curve to the left?