Economics 101 Practice Test: Aggregate Demand and Aggregate Supply | Practice Test / Quiz / MCQs

Classes | Practice Tests / Quizzes | User Guide | Life Manuals

28.5K quizzes covering K–12, CBSE, SAT, ACT, GRE, UPSC, SSC, Banking, Reasoning & more.

Economics 101
| Take A Quiz

Home > Economics 101 > Quizzes > Economics 101 Practice Test: Aggregate Demand and Aggregate Supply

Economics 101 Practice Test: Aggregate Demand and Aggregate Supply

Fast practice, instant feedback. Timer auto-submits when time’s up.

Avg score: 5% • Most missed: “People will spend less if the price level”

Aggregate demand is the total amount of money spent on goods and services in an economy. Aggregate supply is the total number of goods and services that producers are willing to sell at a given price. Here are some details about aggregate demand and aggregate supply: Aggregate demand: The formula for aggregate demand is AD = C + I + G + (X - M). In this equation, AD is aggregate demand, C is consumption, I is investment, G is government spending, X is total exports, and M is total imports. Aggregate supply: The formula for aggregate supply is AS = C + S. In this equation, AS is aggregate... Show more

Aggregate demand is the total amount of money spent on goods and services in an economy. Aggregate supply is the total number of goods and services that producers are willing to sell at a given price.

Here are some details about aggregate demand and aggregate supply:
Aggregate demand: The formula for aggregate demand is AD = C + I + G + (X - M). In this equation, AD is aggregate demand, C is consumption, I is investment, G is government spending, X is total exports, and M is total imports.
Aggregate supply: The formula for aggregate supply is AS = C + S. In this equation, AS is aggregate supply, C is the value of consumption expenditure, and S is savings.
Aggregate demand curve; The aggregate demand curve shows the relationship between the price level and the quantity of total spending in an economy.
Aggregate supply changes: Changes in supply can affect demand and how the economy functions.

Show less

Economics 101 Practice Test: Aggregate Demand and Aggregate Supply

Time left 00:00

1. The misperceptions theory of the short-run aggregate supply curve says that output supplied will decrease if the price level increases

more than expected so that firms believe the relative price of their output has increased.more than expected so that firms believe the relative price of their output has decreased.less than expected so that firms believe the relative price of their output has increased.less than expected so that firms believe the relative price of their output has decreased.

2. Recession refers principally to

below average inflation.below average real GDP growth. negative real GDP growth. negative inflation.

3. If the price level is less than expected, producers believe their relative price has

decreased and so increase production. increased and so decrease production.increased and so increase production. decreased and so decrease production.

4. Investment is a

large part of real GDP, yet it accounts for a large share of the fluctuation in real GDP.small part of real GDP, yet it accounts for a large share of the fluctuation in real GDP.large part of real GDP, so it accounts for a small share of the fluctuation in real GDP.small part of real GDP, so it accounts for a small share of the fluctuation in real GDP.

5. Keynes believed that economies experiencing high unemployment should adopt policies to

reduce government expenditures.increase aggregate supply.increase aggregate demand.reduce the money supply.

6. Suppose a stock market crash makes people feel poorer. This decrease in wealth would cause people to

increase consumption, which shifts aggregate demand right.increase consumption, which shifts aggregate supply right.decrease consumption, which shifts aggregate demand left.decrease consumption, which shifts aggregate supply left.

7. Which of the following has been suggested as an important cause of the Great Depression?

All of these are correct.a large decline in government expendituresa decline in the money supplyan increase in the relative price of oil

8. Which of the following shifts the long-run aggregate supply curve to the left?

an increase in the availability of natural resources from abroad stricter environmental regulations None of the above is correct. an increase in the economy’s capital stock

9. By itself technological progress tends to

raise real GDP and lower the price level. decrease both real GDP and the price level. decrease real GDP and raise the price level. raise both real GDP and the price level.

10. Suppose that there has been bad weather, a decrease in the availability of oil or some other temporary increase in firms’ costs. In the short run prices

fall and output rises.and output rise.and output fall.rise and output falls.

11. Suppose a shift in aggregate demand creates an economic contraction. If policymakers can respond with sufficient speed and precision, they can offset the initial shift by shifting aggregate

demand right.supply left.demand left.supply right.

12. Which of the following is associated primarily with aggregate supply shifting far to the left?

stagflation of the 1970sNone of the above is correct.the economic boom of the 1940sthe Great Depression

13. According to the aggregate demand and aggregate supply model, in the long run an increase in the money supply

increases the price level, but does not change real GDP.increases real GDP, but does not change the price level.increases the price level and real GDP.decreases real GDP, but does not change the price level.

14. An increase in the expected price level shifts aggregate

demand to the left.supply to the left.demand to the right.supply to the right.

15. Suppose there is a broad increase in the price of stocks which causes an increase in the real wealth of individuals. Consumption spending rises in response to the increase in wealth. This will cause the

aggregate supply curve to shift to the right.general price level to fall.rate of unemployment to decrease.aggregate demand curve to shift to the left.

16. Aggregate demand shifts right when the government

raises personal income taxes.decreases the money supply.institutes an investment tax credit.All of these are correct.

17. The long-run aggregate supply curve shifts right if

Congress raises the minimum wage substantially.immigration from abroad increases.unemployment insurance benefits are made more generous.All of these are correct.

18. During recessions investment

rises and unemployment declines. and unemployment rise. declines and unemployment rises. and unemployment decline.

19. The sticky price theory of the short-run aggregate supply curve says that when the price level rises more than expected, some firms will have

higher prices than they desire, which increases their sales.lower prices than they desire, which depresses their sales.lower prices than they desire, which increases their sales.higher prices than they desire, which depresses their sales.

20. Most economists believe that classical economic theory is a good description of the world in

the short run and in the long run.the short run, but not in the long run.the long run, but not in the short run.neither the short nor long run.

21. Business cycles

no longer are very important due to government policy.are explained mostly by fluctuations in corporate profits.All of these are correct.are fluctuations in real GDP and related variables over time.

22. Which of the following tends to increase the quantity of output demanded when the price level decreases?

the exchange rate effectAll of these are correct.the wealth effect the interest rate effect

23. Which of the following do we expect in the short run if the money supply increases?

Investment falls. The interest rate rises. All of these are correct.The price level rises.

24. People will spend less if the price level

rises, making the dollars they hold worth less.rises, making the dollars they hold worth more.falls, making the dollars they hold worth less.falls, making the dollars they hold worth more.

25. Long-run analysis of the macroeconomy is based on

monetary neutrality but not the classical dichotomy. neither the classical dichotomy nor monetary neutrality.the classical dichotomy, but not monetary neutrality. both the classical dichotomy and monetary neutrality.

Welcome to Fatskills

Join 4M+ learners. Unlock unlimited quizzes, wrong-answer tracking, flashcards + reminders, study guides, and 1-on-1 challenges.

Create a free account Sign in

900+ exams • Millions of questions • No spam

❤ If you liked Fatskills, consider supporting us by checking out The Life Manuals You Never Got.

🌈 Our mission is to help improve your scores in any subject and exam withonline quizzes, practice tests, study guides, & advice for students. Since 2018.

About | Explore | User Guide | Topics | Subjects | Doubt Solver | Career Aptitude Test | Answers | Free Tools | OSHA Basics Quiz | What Should We Know?
Privacy | Terms |

All trademarks, logos and brand names are the property of their respective owners. All company, product and service names used in this website are for identification purposes only. Use of these names, trademarks and brands does not imply endorsement.

25 Questions

❤ If you liked Fatskills, consider supporting us by checking out The Life Manuals You Never Got.

About | Explore | User Guide | Topics | Subjects | Doubt Solver | Career Aptitude Test | Answers | Free Tools | OSHA Basics Quiz | What Should We Know?
Privacy | Terms |

Without work one finishes nothing. - Ralph Waldo Emerson
© 2026 Fatskills.com

All trademarks, logos and brand names are the property of their respective owners. All company, product and service names used in this website are for identification purposes only. Use of these names, trademarks and brands does not imply endorsement.

25 Questions

❤ If you liked Fatskills, consider supporting us by checking out The Life Manuals You Never Got.

About | Explore | User Guide | Topics | Subjects | Doubt Solver | Career Aptitude Test | Answers | Free Tools | OSHA Basics Quiz | What Should We Know? Privacy | Terms |

Without work one finishes nothing. - Ralph Waldo Emerson© 2026 Fatskills.com

All trademarks, logos and brand names are the property of their respective owners. All company, product and service names used in this website are for identification purposes only. Use of these names, trademarks and brands does not imply endorsement.

About | Explore | User Guide | Topics | Subjects | Doubt Solver | Career Aptitude Test | Answers | Free Tools | OSHA Basics Quiz | What Should We Know?
Privacy | Terms |

Without work one finishes nothing. - Ralph Waldo Emerson
© 2026 Fatskills.com