GCE A-Level - Higher 2 (H2) · Economics (9570)

Aggregate Demand and Aggregate Supply: Practice Questions

5 multiple-choice questions marked as you go, and 2 written questions with worked solutions. All on Aggregate Demand and Aggregate Supply.

7 questions10 marksFree, no account

Question 1

1 mark

Which of the following scenarios would lead to a decrease in the size of the national income multiplier in a small and open economy like Singapore?

Question 2

1 mark

Suppose an economy's Aggregate Demand (AD) and Short-Run Aggregate Supply (SRAS) are in equilibrium at the full-employment level. If there is a sudden, temporary disruption in the supply of semiconductors, how will the equilibrium change in the short run?

Question 3

1 mark

Which of the following is most likely to cause a simultaneous increase in the general price level and a decrease in the real national output in the short run?

Question 4

1 mark

An economy experiences a significant increase in the marginal propensity to import (MPM). Ceteris paribus, what is the effect of this change on the value of the multiplier and the effectiveness of expansionary fiscal policy in increasing national income?

Question 5

1 mark

In the context of the AD-AS framework, how would a significant improvement in labor productivity, resulting from the successful implementation of nationwide skills retraining programs, be illustrated?

Question 6

2 marks

Using the components of Aggregate Demand (AD), explain how a decrease in corporate income tax rates would likely affect the equilibrium level of national output in the short run.

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

Question 7

3 marks

(a) Explain the components of Aggregate Demand (AD) and how an increase in consumer confidence might affect the equilibrium level of national income.

(b) Briefly explain how the multiplier effect works when there is an autonomous increase in government spending.

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

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