Macroeconomics Multiple choice 1. The aggregate-demand curve shows the a. Quanti

Question

Macroeconomics Multiple choice

1.   The aggregate-demand curve shows the
a.   Quantity of labor and other inputs that firms want to buy at each price level.
b.   quantity of labor and other inputs that firms want to buy at each inflation rate.
c.   quantity of domestically produced goods and services that households want to buy at each price level.
d.   quantity of domestically produced goods and services that households, firms, the government, and customers abroad want to buy at each price level.

2.   Which of the following adjust to bring aggregate supply and demand into balance?
a.   the price level and real output
b.   the real rate of interest and the money supply
c.   government expenditures and taxes
d.   the saving rate and net exports

4.   Which of the following would help explain why the aggregate demand curve slopes downward?
a.   An unexpectedly low price level raises the real wage, which causes firms to hire fewer workers and produce a smaller quantity of goods and services.
b.   A lower price level causes domestic interest rates to rise and the real exchange rate to appreciate, which stimulates spending on net exports.
c.   A higher price level increases real wealth, which stimulates spending on consumption.
d.   A lower price level reduces the interest rate, which encourages greater spending on investment goods.

5.   As the price level rises
a.   people will want to buy more bonds, so the interest rate rises.
b.   people will want to buy fewer bonds, so the interest rate falls.
c.   people will want to buy more bonds, so the interest rate falls.
d.   people will want to buy fewer bonds, so the interest rate rises.

Explanation / Answer

1. d. quantity of domestically produced goods and services that households, firms, the government, and customers abroad want to buy at each price level.

2. a. the price level and real output

4. d. A lower price level reduces the interest rate, which encourages greater spending on investment goods.

5. d. people will want to buy fewer bonds, so the interest rate rises.

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