Solved AD-AS Model (Macroeconomic Models) MCQs:

AD-AS Model MCQs for Competitive Exams

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Topic Notes: AD-AS Model

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AD-AS Model MCQs in Economics are useful for candidates who need targeted practice for CSS, PMS, FPSC, PPSC, NTS, entry tests, and other competitive exams in Pakistan. This topic page is designed for quick revision, repeated practice, and exam-focused preparation.

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What is the expected macroeconomic impact of improved employee training programs on the economy?

shift aggregate demand to the left

Shift aggregate supply to the right

Shift aggregate demand to the right

Shift aggregate supply to the left

Report

Which of the following is not a valid explanation for the downward slope of the aggregate demand curve?

Monetary policy having no impact on real economy

Changes in wealth

Changes in exchange rates

Changes in interest rates

Report

Which of the following conditions characterizes the economic phenomenon known as stagflation?

rising prices and rising output

falling prices and falling output

falling prices and rising output

rising prices and falling output

Report

Which of the following factors does not cause a shift in the long-run aggregate supply (LRAS) curve?

An increase in price expectations

An increase in the available labour

An increase in the available capital

All of these answers shift the long-run aggregate supply curve

Report

Why does the wealth effect cause the aggregate demand curve to slope downward?

lower prices increase the value of money holding and consumers spending increase

lower prices reduce money holding increase lending, interest rates fall and investment spending increase

lower prices increase money holding decrease lending, interest rates rise and investment spending falls

lower prices decrease the value of money holding and consumers spending decrease

Report

How does an increase in aggregate consumption spending impact the aggregate demand curve?

shift aggregate demand to the right

shift aggregate supply to the left

shift aggregate demand to the left

shift aggregate supply to the right

Report

Which theory explains the short-run aggregate supply curve by suggesting that suppliers mistakenly interpret a general price level decline as a fall in the relative price of their own goods?

classical dichotomy theory of the short run aggregate supply curve

sticky wage theory of the short run aggregate supply curve

misperceptions theory of the short run aggregate supply curve

sticky price theory of the short run aggregate supply curve

Report

Which three components are typically identified as the primary drivers of aggregate demand in a simplified model?

investment + tax + exports

investment + government expenditure + exports

investment + government expenditure + imports

savings + government expenditure + exports

Report

How does the interest rate effect contribute to the downward slope of the aggregate demand curve?

lower prices increase money holdings decrease lending interest rates rise, and investment spending falls

lower prices decrease the value of money holdings and consumers spending decreases

lower prices increase the value of money holding and consumer spending increases

lower prices reduce money holdings increase lending interest rates fall, and investment spending increase

Report

In the AD-AS model, what is the long-run impact of an increase in government military spending on output and the price level?

Prices rise; output is unchanged from its initial value

Output and the price level are unchanged from their initial values

Price fall; output is unchanged from its initial value

Output falls; prices are unchanged from the initial value

Report

AD-AS Model MCQs for Competitive Exams

AD-AS Model MCQs for Competitive Exams

Topic Notes: AD-AS Model

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