Economic Growth and Consumer Spending Quiz

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What determines the equilibrium price level and equilibrium level of real GDP in an economy?

Intersection of aggregate demand and short-run aggregate supply curves (correct)

Long-run aggregate supply curve

Aggregate demand curve

Short-run aggregate supply curve

How does an increase in oil prices impact the short-run aggregate supply curve?

Does not affect the curve

Shifts it to the right

Shifts it to the left (correct)

Causes a parallel shift

What is the result of positive economic growth on the natural level of real GDP?

Shifts the natural level of real GDP

Increases the natural level of real GDP (correct)

Has no impact on the natural level of real GDP

Decreases the natural level of real GDP

Which factor does NOT influence consumer spending according to the text?

Employment rate Signup and view all the answers

What government policies can affect consumer spending according to the text?

Interest rates and taxation Signup and view all the answers

Which factor is NOT considered a determinant of consumer spending according to the text?

Government funding for defense Signup and view all the answers

What is one assumption made when drawing the aggregate demand curve?

The government holds the supply of money constant. Signup and view all the answers

How does the wealth effect influence buyers' behavior in relation to the price level?

Buyers reduce their purchases as the price level rises. Signup and view all the answers

What is the reason behind the interest rate effect influencing the demand for real GDP?

Increased demand for money with a fixed supply causes interest rates to rise. Signup and view all the answers

How does a rise in the interest rate affect spending sensitive to interest rates according to the text?

It decreases spending. Signup and view all the answers

What is one reason for the inverse relationship between the price level and real GDP according to the text?

The wealth effect and interest rate effect. Signup and view all the answers

How does a decrease in the price level affect buyers' purchasing power according to the text?

Buyers become wealthier and purchase more goods and services. Signup and view all the answers

What does the aggregate demand (AD) represent?

Sum of consumer expenditure, investment spending, government purchases, and net exports Signup and view all the answers

Which component is NOT included in the calculation of Investment Spending (I)?

Expenditures of households on consumption goods Signup and view all the answers

What does the downward sloping aggregate demand curve indicate?

There is an inverse relationship between price level and quantity demanded of real GDP Signup and view all the answers

Which factor explains the downward slope of the aggregate demand curve through the wealth effect?

Inverse relationship between price level and real purchasing power Signup and view all the answers

What does the net exports component in the calculation of Aggregate Demand represent?

Difference between exports and imports Signup and view all the answers

Which factor does NOT directly influence the value of Aggregate Demand?

Price level of imports Signup and view all the answers

Economic Growth and Consumer Spending Quiz

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