Aggregate demand (AD): Practice Questions

• a.Spending on imports
• b.Government expenditure
• c.Taxation
• d.Household savings

• a.A reduction in the total level of government welfare payments
• b.An improvement in business confidence regarding future profitability
• c.A decision by the Central Bank to increase interest rates
• d.A rise in the exchange rate of the domestic currency

• a.A reduction in the rate of corporation tax
• b.A decrease in the level of business confidence regarding future sales
• c.An increase in the central bank's base interest rate
• d.A decrease in the availability of credit from commercial banks

• a.There will be a movement downwards along the AD curve
• b.The AD curve will shift to the right
• c.There will be a movement upwards along the AD curve
• d.The AD curve will shift to the left

• a.A significant increase in the rate of domestic inflation relative to other countries
• b.A fall in domestic real income leading to lower expenditure on imports
• c.An appreciation of the domestic currency against the currencies of its trading partners
• d.A deep recession occurring in the country's primary export markets

Write your answer out first, then check it against the worked solution.

Write your answer out first, then check it against the worked solution.

Write your answer out first, then check it against the worked solution.