Lesson 2.2.1

2.2.1 The characteristics of AD Quiz: Pearson Edexcel Economics, Unit 2

20 questions

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Lesson 2.2.1, The characteristics of AD: 20 multiple choice questions for the Pearson Edexcel Economics (9EC0), Unit 2: Theme 2: The UK economy – performance and policies, written with Revision Ninja.

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The 20 questions

  1. Which formula represents the components of aggregate demand in an economy?

    • C + S + T + (X - M)
    • C + I + G + S
    • C + I + G + (X - M)
    • C + I + G + T

  2. Which component of AD is usually the largest in the UK economy?

    • consumption
    • investment
    • government expenditure
    • net trade

  3. What happens to real output demanded when the price level falls along an AD curve?

    • It shifts right
    • It remains constant
    • It decreases
    • It increases

  4. What causes a movement along the aggregate demand curve?

    • Consumer confidence change
    • Government spending change
    • Income tax change
    • Price level change

  5. Which change causes the aggregate demand curve to shift to the right?

    • Increased business confidence
    • Reduced government spending
    • Higher interest rates
    • Increased income tax

  6. Which event causes a leftward shift of the aggregate demand curve?

    • Increased government spending
    • Higher export demand
    • Increased income tax
    • Lower interest rates

  7. If C = 500, I = 200, G = 300, X = 250 and M = 220, what is aggregate demand?

    • 1,250
    • 950
    • 780
    • 1,030

  8. In a closed economy with C = 400, I = 150 and G = 200, what is aggregate demand?

    • 750
    • 950
    • 550
    • 350

  9. An economy's net trade balance moves from a surplus of 40 to a deficit of 25. If all other components are unchanged, the change in AD is:

    • a fall of 15
    • a rise of 15
    • a rise of 65
    • a fall of 65

  10. A downward movement along an aggregate demand curve indicates which change?

    • Rightward curve shift
    • Higher price level
    • Decreased real output
    • Lower price level

  11. What distinguishes a shift of the aggregate demand curve from a movement along it?

    • Interest rate movements
    • Non-price determinants
    • Price level changes
    • Exchange rate movements

  12. Which component accounts for the largest proportion of UK aggregate demand?

    • Government spending
    • Net exports
    • Investment spending
    • Consumer spending

  13. A fall in overseas incomes directly affects which component of aggregate demand?

    • Net trade
    • Investment
    • Government spending
    • Consumption

  14. What happens to unsold business inventories when aggregate demand exceeds current output?

    • Inventories fall
    • Imports fall
    • Inventories stay constant
    • Inventories rise

  15. How does an appreciation of the domestic exchange rate affect net trade?

    • Imports fall
    • Net trade falls
    • Net trade rises
    • Exports increase

  16. Which component of UK aggregate demand is historically the most volatile?

    • Imports
    • Consumption
    • Investment
    • Government spending

  17. What happens to the aggregate demand curve when government spending increases?

    • Moves downward along
    • Moves upward along
    • Shifts left
    • Shifts right

  18. How does a cut in interest rates primarily affect consumer spending and business investment?

    • Increases both
    • Decreases investment only
    • Increases consumption only
    • Decreases both

  19. What is the short-run effect of a rightward shift in aggregate demand on output and price level?

    • Both increase
    • Both decrease
    • Output increases, prices fall
    • Output falls, prices rise

  20. Which event causes a movement along the aggregate demand curve rather than a shift?

    • Higher consumer confidence
    • Income tax cut
    • Price level change
    • Increased government spending

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