Question : The wealth effect suggests that an increase in the price level leads to:

Option 1: A decrease in consumption expenditure
 

Option 2: An increase in consumption expenditure
 

Option 3: A decrease in investment expenditure

Option 4: An increase in investment expenditure

Question : The crowding-out effect suggests that an increase in government expenditure leads to:

Option 1: A decrease in private investment
  

Option 2: An increase in private investment
 

Option 3: No change in private investment

Option 4: An increase in savings

Question : Inflation is defined as:

Option 1: A sustained increase in the general price level
   

Option 2: A sustained decrease in the general price level
    

Option 3: A temporary increase in the general price level

Option 4: A temporary decrease in the general price level

Question : The aggregate demand curve slopes downward due to the:

Option 1: Wealth effect, interest rate effect, and foreign trade effect
  

Option 2: Wealth effect and interest rate effect only
   

Option 3: Interest rate effect and foreign trade effect only

Option 4: Wealth effect and foreign trade effect only

Question : The concept of the multiplier effect suggests that an increase in:

Option 1: Investment expenditure leads to a larger increase in real GDP
    

Option 2: Consumption expenditure leads to a larger increase in real GDP
  

Option 3: Government expenditure leads to a larger increase in real GDP

Option 4: Net exports leads to a larger increase in real GDP