Practice Introduction (2.1) - Chapter 2: Theory of Income and Employment

Practice: Introduction

Lesson 2.1Theory of Income and Employment

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10 questions

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3 cards from this section. Quick, good the night before a test.
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6 sample questions

Question 1.
Define aggregate demand.
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Think about total consumption, investment, government spending, and net exports.
Question 2.
What does the term equilibrium refer to in economics?
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Remember the balance point in a scale.
3Question 3.
What is aggregate demand?
- Total goods and services demanded
- Only consumer spending
- Only government spending
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Think broadly about all types of economic demand.
4Question 4.
The Classical view suggests that economies are self-correcting.
- True
- False
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Remember that Classical theory believes in market mechanics.
Question 5.
How would a sudden increase in consumer confidence in the economy affect aggregate demand and the equilibrium? Discuss the potential long-term implications.
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Consider the ripple effects of increased economic activity.
Question 6.
Evaluate how a fiscal stimulus package during a recession might impact the multiplier effect within the economy. What are the potential risks?
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Think about how increased spending can lead to unforeseen consequences if the economy is pushed too hard.

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