The total quantity of goods and services produced (or supplied) in an economy in a given period is ?

A. Aggregate investment
B. Aggregate expenditure
C. Aggregate demand
D. Aggregate output

In the equation C = a + bY, which describes the aggregate consumption function ‘b’ stands for ?

A. The marginal propensity to consume.
B. The amount of income when consumption is zero
C. The average consumption level
D. The amount of consumption when income is zero

The liquidity trap occurs when the demand for money ?

A. Is perfectly interest elastic
B. Is perfectly interest inelastic
C. Means that an increase in money supply leads to a fall in the interest rate
D. Means that an increases in the money supply leads to an increases in the interest rate

According to the quantity theory of money an increase in the money supply is most likely to lead to inflation if ?

A. The velocity of circulation decrease
B. The number of transaction decrease
C. There is deflation
D. The velocity of circulation and the number of transactions is constant

To reduce the supply of money the government could ?

A. Reduce interest rates
B. Buy back government bonds
C. Sell government bonds
D. Encourage banks to lend

An outward shift in the demand for money other things being equals should lead to ?

A. A lower interest rate but the same quantity of money
B. A higher interest rate but the same quantity of money
C. A higher quantity of money but lower interest rates
D. A higher quantity of money but the same interest rate

A profit maximising firm will invest up to the level of investment where ?

A. The cost of borrowing equals the marginal efficiency of capital
B. The cost of borrowing is greater than the marginal efficiency of capital
C. The cost of borrowing is less then the marginal efficiency of capital
D. The cost of borrowing equals the marginal propensity to consume

Investment is a unstable element of aggregate demand because it depends heavily on ?

A. Government policy
B. Expectations
C. National income
D. Historic trends

The difference between goes investment and net investment is ?

A. Depreciation
B. Acceleration
C. Declaration
D. Capital investment

The marginal propensity to consume is equal to ?

A. Total spending / total consumption
B. Total consumption / total income
C. Change in consumption / change in income
D. Change in consumption / change in savings