AGGREGATE SUPPLY & DEMAND

MILLIONAIRE STYLE QUIZ

What is shown on the “x axis” for aggregate demand?

A. QUANTITY

B. NATIONAL OUTPUT

C. Nominal GDP

C. TOTAL DEMAND

What are the components of aggregate demand?

A. CONSUMPTION, INVESTMENT, GOVERNMENT SPENDING AND EXPORTS

B. CONSUMPTION, INVESTMENT, GOVERNMENT, SAVINGS AND NET EXPORTS

C. CONSUMPTION, INVESTMENT, GOVERNMENT SPENDING AND NET EXPORTS

D. CONSUMPTION, INVESTMENT, GOVERNMENT, PRIVATE SECTOR SPENDING AND NET EXPORTS.

Which of the following is a non-durable good?

A. LAPTOP

B. TOILET ROLL

C. CELL PHONE

D. PLANE

When firms spend on capital to increase their output this is called:

A. REPLACEMENT INVESTMENT

B. NATURAL INVESTMENT

C. INDUCED INVESTMENT

D. CYCLICAL INVESTMENT

In circular flow model buying shares would really represent:

A. AN INVESTMENT

B. SAVINGS

C. AN INJECTION

D. A CAPITAL INVESTMENT

What is the formula for aggregate demand?

a. C + I + E + D – (X-M)

b. C + I + E + (X-M)

c. C + I + G + (E)

d. C + I + G + (X-M)

Which of the following would not be used on the `x’ axis with an aggregate demand curve?

a. National Income

b. National Expenditure

c. National Output or Real Output

d. National Production

If the central banks adopts a contractionary monetary policy this could:

A. LEAD TO A FALL IN AD

B. LEAD TO AN EXPANSION OF AD

C. RESULT IN AN EXPANSIONARY FISCAL

POLICYD. LEAD TO AN INCREASE

IN PRICES.

An increase in any of the components of aggregate demand will result in:

A. A Shift in the aggregate demand curve to the left

B. A Shift in the aggregate demand curve to the right

C. A movement down the demand curve.

D. A movement up the demand curve.

What defines a persons wealth?a. The Income they earn

b. The assets they own.

c. Their income & assets

d. Their gross or net assets

What is another name for a consumer confidence index?

a. A consumer feelings index

b. A consumer choice index

c. A consumer resilience index

d. A consumer sentiment index

Which of the following is an example of an indirect tax?

A. Income Tax

B. Sales Tax on Goods & Services

C. Corporate Tax

D. Capital Gains Tax

The economy enters a recession. What would be an appropriate response from the Central Bank and Federal Government?

a. ADOPT AN EXPANSIONARY FISCAL POLICY AND A

CONTRACTIONARY MONETARY POLICY

B. ADOPT AN EXPANSIONARY FISCAL POLICY AND AN

EXPANSIONARY MONETARY POLICY

C. ADOPT A CONTRACTIONARY FISCAL POLICY AND A

CONTRACTIONARY MONETARY POLICY

D. ADOPT A CONTRACTIONARY FISCAL POLICY AND AN

EXPANSIONARY MONETARY POLICY.

What is the current US federal reserve interest rate?

A. 0.25% B. 0.50%

C. 0.75% D. 0.15%

Economic Institutions Where are the headquarters of the World Bank?

A. NEW YORK B. LONDON

C. WASHINGTON DC D. CHICAGO

What is aggregate supply?A. THE TOTAL SUPPLY FOR A WHOLE

INDUSTRY RATHER THAN A FIRMB. IS THE TOTAL AMOUNT OF GOOD

AND SERVICES THAT A BUSINESS WILL SUPPLY AT THE MINIMUM

PRICE LEVEL

C. IS THE TOTAL AMOUNT OF GOOD AND SERVICES THAT ALL INDUSTRIES IN AN ECONOMY WILL PRODUCE AT

A GIVEN PRICE LEVEL

D. IS THE TOTAL AMOUNT OF GOOD AND SERVICES THAT ALL INDUSTRIES IN AN ECONOMY WILL PRODUCE AT

THE EQUILIBRIUM PRICE.

What does the Short Run Aggregate Supply curve look like?

a. It is upward sloping and there is a positive relationship

between the price level and the amount of output

b. It is downward sloping and there is a negative relationship between the price level and the

amount of output

c. It is downward sloping and there is a positive relationship

between the price level and the amount of output

d. It is downward sloping and there is an inverse relationship

between the price level and the amount of output

How long is the “short run” when examining aggregate supply?

a. About 12 to 18 months

b. The period of time when the prices of the factors of production do not change. The wage rate is fixed.

c. The period of time when the prices of the factors of production do not change, with the exception of wages,

which must reflect market conditions.

d. The period of time when all the factors of production change in price and thus there is a new supply curve for

the economy.

Leaders in Economics & BusinessWho is the President of European Central Bank?

A. FELIPE GONZALEZ B. MARIO DRAGHI

C. JACK STRAW D. CHRISTIAN PORTO

What will cause a complete shift in the SRAS?

A. Increase in price

B. Decrease in price

C. A change in any of the factors except price

D. A change in any of the factors including price.

What are “supply side” shocks?

A. FACTORS THAT CAUSE CHANGES IN THE COST OF PRODUCTION

B. FACTORS THAT CAUSE DECREASES IN THE COST OF PRODUCTION

C. FACTORS THAT CAUSE AN INCREASE IN THE COST OF PRODUCTION

D. ONLY INCREASES IN WAGES

ECONOMIC INSTITUTIONSWhen was the WTO established?

a. JANUARY 1ST 1995

b. JANUARY 1ST 2005

c. JANUARY 1ST 2000

d. JANUARY 1ST 1985

What are the two main schools of thought regarding the Long Run Aggregate Supply Curve (LRAS)?

A. THE KEYNESIAN VIEW AND THE ADAM SMITH PERSPECTIVE

B. THE KEYNESIAN VIEW AND THE NEO LIBERIAL ECONOMISTS.

C. THE KEYNESIAN VIEW AND PROTECTIONIST PERSPECTIVE

D. THE KEYNESIAN VIEW AND NEO CLASSICAL OR FREE MARKET ECONOMISTS

During periods of low demand, the Keynesians would argue:

A. THAT IS POSSIBLE TO INCREASE THE LEVEL OF OUTPUT WITHOUT INCURRING INCREASING COSTS, BECAUSE OF SPARE CAPACITY IN THE

ECONOMY.

B. THAT IS NOT POSSIBLE TO INCREASE THE LEVEL OF OUTPUT WITHOUT INCURRING INCREASING COSTS.

C. THAT IS POSSIBLE TO INCREASE THE LEVEL OF OUTPUT WITHOUT INCURRING AN INCREASE IN WAGES.

D. THAT IS NOT POSSIBLE TO INCREASES OUTPUT, WITHOUT INCREASING COSTS, DUE TO LACK OF SPARE CAPACITY.

When the economy is at full capacity, the relevant abbreviation is:

a. Ef

b. Cf

c. Yf

d. FC

Based on this diagram, the LRAS in stage 3 becomes:

A. Perfectly Elastic

B. Perfectly Inelastic

C. Unit Elastic

D. Moderately Inelastic

When the economy is at full capacity we also mean the economy has achieved:

A. FULL EMPLOYMENT WITH NO UNEMPLOYMENT

B. FULL EMPLOYMENT WITH VERY LOW LEVELS OF UNEMPLOYMENT

C. LOW LEVELS OF INFLATION AND LOW LEVELS OF UNEMPLOYMENT

D. ECONOMIC GROWTH WITHOUT ENTERING A

RECESSION

Which of the following statements regarding the neo-classical LRAS curve is correct?

a. The LRAS curve is vertical at all price levels, even with very

low price levels.

b. The LRAS curve is vertical from when the economy

reaches moderate levels of economic growth.

c. The LRAS curve is perfectly elastic at all price levels.

b. The LRAS curve is vertical in stage 1, 2 and 3.

Leaders in Economics & BusinessWho is the President of the World Bank?He is the 12th president of the bank & was appointed

on July 1st 2012, for a five year renewable term.

b. Jim Yong Kim

a. Kim Long Park

c. Kim Yong Park

d. Kim Wu Park

When modeling aggregate supply & demand the average price level can also be interpreted as the:

A. THE CONSUMER PRICE INDEX

B. THE WHOLESALE PRICE INDEX

A COMPREHENSIVEC. GUAGE / INDICATOR OF THE

OVERALL INFLATION RATE

D. THE PRODUCER PRICE INDEX

According to the neo-classical school we can only increase income by new…:

A. GOVERNMENT SPENDING

B. DEMAND SIDE POLICIES

C. SUPPLY SIDE POLICIES

D. CONSUMERS ENTERING THE MARKET

Improvements in technology and education, will have what impact on the LRAS curve?

a. They will shift the curve to the right

b. They will shift the curve to the left

c. They will shift the curve upward

d. They will shift the curve downward

Leaders in Economics & Business

Who is the US Treasury Secretary?

A. Jack Lew B. Timothy Geithner

C. Mark Henderson D. Jack Dolton

Which of the following is not a market oriented supply side policy?

a. REDUCTION IN INCOME TAX

b. A DECREASE IN UNEMPLOYMENT BENEFITS

c. DEREGULATION

d. MORE SPENDING ON R&D

Economic Institutions

Which country joined to make the BRICS on December 24th 2010

a. South Africa b. India

c. Brazil

d. Indonesia

What does it mean to deregulate the business environment?

D. MAKE AN INDUSTRY MORE USER FRIENDLY

B. REDUCE “RED TAPE” & COSTLY

REGULATIONS FOR BUSINESS

C. REMOVE ALL GOVERNMENT

RESTRICTIONS/RULES/REGULATONS ON

BUSINESS OPERATIONS

A. IMPLEMENT MORE FLEXIBLE LABOR LAWS

THAT BENEFIT BUSINESS

Which of the following is not an interventionist supply side policy?

a. Education & Training

b. Provision of Infrastructure

c. R&D

d. Privatization

Economic InstitutionsECONOMIC INSTITUTIONS

MERCOSUR IS AN EXAMPLE OF:

A. COMMON MARKET

B. CUSTOMS UNION

C. FREE TRADE AREA

D. PREFERENTIALTRADE ZONE

Which of the following policies would most likely attract a government tax credit?

a. Privatization

b. Spending on R&D

c. Spending on Education &

Training d. Spending on

technology

Leaders in Economics & BusinessWho is the Managing Director of the International

Monetary Fund? She was appointed on the 5th July 2011

a. Christine Hoareau

d. Christine Lagarde

c. Christine L’Fante

b. Sarah Lagarde