Choose the correct answer for each of the following questions.

1. The aggregate demand curve is

a. Upward sloping.

b. Vertically sloped.

c. Downward sloping.

d. Horizontally sloped.

2. If congress and the white house agree on tax reductions this would be considered as

a. Monetary policy.

b. Interest rate policy.

c. Fiscal policy.

d. Automatic stabilizers.

3. Consumption is primarily determined by

a. Taxes.

b. National income.

c. Disposable income.

d. Spending.

4. If the 45 degree line lies below the consumption function

a. Consumption expenditure is less than income.

b. Consumption expenditure is smaller than income.

c. Consumption expenditure is equal to income.

d. Consumption expenditure is greater than income.

5. If the 45 degree line is above the AE curve

a. Aggregate expenditure is less than income.

b. Aggregate expenditure is more than income.

c. Aggregate expenditure is equal to income.

d. Aggregate expenditure is greater than income.

6. When the saving function is below the disposable income line

a. Saving is occurring.

b. Saving is taking place.

c. Dissaving is occurring

d. Dissaving ends.

7. The MPC is used to determine the

a. Saving function.

b. The spending multiplier.

c. Taxes households pay.

d. Disposable income of households.

8. The negative relationship between the aggregate price level and aggregate output demanded gives the aggregate demand curve

a. an upward slope

b. a vertical slope.

c. a horizontal slope.

d. a downward slope.

10. The aggregate demand curve shows the relationship between the aggregate price level and:

a. aggregate productivity.

b. the aggregate unemployment rate.

c. the aggregate quantity of output demanded by households, businesses, the government, and the rest of the world.

d. the aggregate quantity of output demanded by businesses only.