Lesson 4.2.2.3

4.2.2.3 The determinants of aggregate demand Quiz: AQA Economics, Unit 2

20 questions

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Lesson 4.2.2.3, The determinants of aggregate demand: 20 multiple choice questions for the AQA Economics (7136), Unit 2: The national and international economy, written with Revision Ninja.

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The 20 questions

  1. What is aggregate demand in a national economy?

    • Total business revenue
    • Total planned expenditure
    • Total money supply
    • Total national output

  2. Which formula represents aggregate demand in an economy?

    • C + I + G + S
    • C + I + G + (X - M)
    • X - M + S + T
    • C + I + S + T

  3. Which factor is the primary determinant of household consumption spending?

    • Disposable income
    • Government spending
    • Export volumes
    • Corporation tax

  4. What change is most likely to cause a rise in business investment spending?

    • Lower consumer confidence
    • Higher business taxes
    • Lower interest rates
    • Higher interest rates

  5. What factor directly determines total domestic spending on imports?

    • Foreign inflation rate
    • Government borrowing
    • Real household income
    • Domestic savings rate

  6. What determines the level of investment according to the basic accelerator process?

    • Change in output
    • Level of savings
    • Change in inflation
    • Interest rate changes

  7. What is the primary determinant of total household saving in an economy?

    • Level of imports
    • Corporate dividend rates
    • Government spending
    • Level of income

  8. What is spending on capital goods by firms defined as in macroeconomics?

    • Investment
    • Consumption
    • Saving
    • Retained profit

  9. What is the largest single component of aggregate demand in the UK?

    • Net exports
    • Government expenditure
    • Business investment
    • Household consumption

  10. How does increased government infrastructure spending directly affect aggregate demand?

    • Shifts AD leftward
    • Shifts SRAS leftward
    • Shifts SRAS rightward
    • Shifts AD rightward

  11. Which change in the foreign economy would shift domestic aggregate demand to the left?

    • Lower exchange rate
    • Lower domestic income
    • Lower foreign income
    • Higher foreign income

  12. Which factor is most likely to cause a reduction in household consumption?

    • Higher consumer confidence
    • Higher interest rates
    • Lower income tax
    • Rising house prices

  13. A cut in interest rates primarily increases aggregate demand by encouraging which two components?

    • Consumption and investment
    • Government spending
    • Imports and exports
    • Savings and imports

  14. Why does an increase in household saving reduce aggregate demand in the short run?

    • Export demand falls
    • Government spending falls
    • Consumption expenditure falls
    • Investment expenditure falls

  15. What is the formula for calculating aggregate demand in an open economy?

    • C + I + G + M - X
    • C + I + G + S
    • C + I + G + X - M
    • C + S + T + X - M

  16. How does a rise in the exchange rate usually affect net exports?

    • Imports become dearer
    • Net exports rise
    • Exports become cheaper
    • Net exports fall

  17. According to the accelerator theory, investment spending depends primarily on changes in what?

    • National income growth
    • Government debt levels
    • Interest rate levels
    • Exchange rate movements

  18. An increase in business confidence leads to higher investment because firms expect what?

    • Lower future demand
    • Higher interest rates
    • Lower capital productivity
    • Higher future profits

  19. How does a rise in the marginal propensity to consume directly affect aggregate demand?

    • Has no effect
    • Reduces total investment
    • Decreases aggregate demand
    • Increases aggregate demand

  20. Which calculation represents the net exports component of aggregate demand?

    • Exports minus imports
    • Imports minus exports
    • Consumption plus exports
    • Imports plus exports

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