1) Which of the following best defines Aggregate Demand?

A. The total supply of goods and services in an economy.

B) The total amount of money available for purchase goods and services

C. The demand for a specific good or service in an economy.

D. The total investment made in an economy.

2) which of the following is not an element of AD?

A. Private consumption B. private investment C. private income from abroad D.Net export demand

3. ____ is a curve that shows the amount of real output that buyers desire to purchase at each price
level ceteris paribus.

A.AS curve B. AD curve C. Consumption curve D. GNP curve

4) Which of the following factors can’t make the AD downward?

A. Real Balance effect C. Interest Rate Effect

B. Technology effect D. International Trade Effect E. NFI

5) All of the following factors causes AD curve to shift either to the right or left except_____

A. General level of income B. General price level C. Real interest rate D. Availability of credit,

6) If individuals expect higher prices in future, then what will happened to current consumption?

A.Increase B.Decrease C.It is not affected D.Its impact is unknow.

7) A decrease in the interest rate is

A.Increase consumption B.Decrease investment C.Increase investment D.Increase net export

8) An increase in business taxes can lead to all of the following Except

A. Lowers expected profitability C. Aggregate demand declines

B. Rises expected profitability D. Decrease investment spending

9) which of the following is not determinants net export?

A.Domestic and foreign incomes C. Relative price and exchange rate

B. Domestic and foreign trade policies D. Preferences and technology.

10) Assume that the Ethiopian National Bank decide to Appreciate Ethiopian Birr in terms of US Dollar.
Then which of the following is not true?

A.Foreign goods become cheaper C. Exports fall and imports rise

B. Imports fall and exports rise. D. Aggregate demand decrease

11. which of the following statement is not true about the real wage and labor?

A. As the real wage rises, the quantity supplied of labour rises

B. As the real wage falls, the quantity supplied of labour rises.

C. As the real wage rises, the quantity demanded of labour falls

D. As the real wage falls, the quantity demanded of labour rises.

12) All of the following factors causes the AS curve shifters Except

A. Cost of input or change in input price. C. General price level

B. Change in productivity. D. State of technology

15) The movements from point D to C on the AD curve shows:

A. Increase in quantity demand C. Increase in aggregate demand

B. Decrease in quantity demand. D. Decrease in aggregate demand

16) What causes a movement along the Aggregate Demand curve?

A. Changes in the price level. C. Changes in government spending.

B. Changes in consumer income. D. Changes in technological advancements.

17) What will cause an increase in Aggregate Demand?

A. A decrease in consumer spending. C. A decrease in government spending.

B. An increase in exports. D. An increase in taxes.

18) When Aggregate Demand exceeds Aggregate Supply, what happens to the price level and output in
the short run?

A. Price level increases, and output decreases. C. Price level decreases, and output decreases.

B. Price level increases, and output increases. D. Price level decreases, and output increases.

19) What causes a movement along the Aggregate Supply curve?

A Changes in the price level. C. Changes in consumer spending.

B. Changes in government regulations. D. Changes in technological advancements.

20) What will cause an increase in Short-Run Aggregate Supply?

A. An increase in the price level. C. An increase in government spending.

B. An increase in taxes. D. An increase in imports.

21) When Short-Run Aggregate Supply exceeds Aggregate Demand, what happens to the price level and
output in the short run?

A. Price level increases, and output decreases. C. Price level increases, and output increases

B. Price level decreases, and output decreases. D. Price level decreases, and output increases.

22) Which of the following is not a determinant of Long-Run Aggregate Supply?

A, General price level. C. Availability of resources

B. Technological advancement. D. Economy's productive capacity

23) In the long run, the economy tends to reach:

A. Full employment B. Equilibrium output C. A stable price levels D. All of the above.

24) Which of the following is an example of external shock that can shift the Aggregate Supply curve?

A. Changes in consumer spending C. Changes in government regulations.

B. Changes in international trade policies. D. Changes in technological advancements

25) In a market, when quantity demanded exceeds the quantity supplied at a given price, it results in: A.
Equilibrium B. Surplus C. Shortage D. None of the above

26) An increase in the price of raw materials used in production is likely to result in:

A. An increase in quantity demanded C. A decrease in quantity demanded

B. An increase in quantity supplied D. A decrease in quantity supplied

27) When there is a surplus of a product, what is likely to happen to the price?

A. The price will increase C. The price will decrease

B. The price will remain unchanged D. The price will fluctuate unpredictably

28) A technological advancement that improves production efficiency is likely to result in:
A. An increase in quantity demanded C. A decrease in quantity demanded

B. An increase in quantity supplied D. A decrease in quantity supplied

29) Real wages refer to

A, Wages adjusted for inflation C, Wages paid in cash

B. Wages before taxes D. Wages after deductions

30) If nominal wages increase while the pri remains constant, what happens to real wages?

A))Real wages increase C. Real wages decrease

B) Real wages remain unchanged D. Real wages cannot be determined

31) If the price level increase at a faster rate than nominal wages, what happens to real wages?

A. Real wages increase C. Real wages decrease 00:00

B. Real wages remain unchanged D. Real wages cannot be determined

32) If the nominal wage rate is $15 per hour and the inflation rate is 3%, what is the real wage rate?

A. $14.55 per hour. B. $14.85 per hour. C. $15.45 per hour. D. $15.60 per hour

33) In a period of deflation, where the price level is decre if sing, what happens to real wage nominal
wages remain constant?

A, Real wage increase. C. Real wages decrease

B. Real wages remain unchanged D.Cannot be determined,