Macroeconomics: Aggregate Demand and Aggregate Supply | OCR A-Level Economics (H460)

Macroeconomics: Aggregate Demand and Aggregate Supply

111 questions
10 subtopics
Component 02: Macroeconomics
Component 02 and Component 03

Aggregate Demand and Aggregate Supply is examined on component 02 of OCR Economics, Macroeconomics.

111 recall questions across 10 subtopics.

Sample questions from Macroeconomics: Aggregate Demand and Aggregate Supply

Answer each one closed book first, then open the answer.

The circular flow of income, injections and leakages

In the simple two-sector circular flow, what do firms provide and what do they receive?

Show the answer
Firms provide goods and services to households and receive consumer expenditure in return.
Methods of measuring national income

What does the output method sum, and how does it avoid double counting?

Show the answer
It sums the value added by each firm at each stage of production rather than the total value of its sales, so the value of bought-in inputs is not counted twice.
Components of aggregate demand and their determinants

Which component of aggregate demand is itself the difference between two flows, and why does that matter?

Show the answer
Net exports (X − M), because it is the difference between two separate flows, exports and imports, so it changes whenever either of them changes and can be negative.
The slope of the aggregate demand curve and what shifts it

What is the only change that causes a movement along the aggregate demand curve rather than a shift of it?

Show the answer
A change in the general price level; any change in planned spending at a given price level shifts the whole curve instead.
Consumption, income and the role of expectations

How does a rise in house prices affect consumption even when incomes have not changed?

Show the answer
Owners feel wealthier and can borrow against the higher value of their property, so consumption rises through the wealth effect.
Short run and long run aggregate supply curves

What is measured on each axis of an aggregate supply diagram?

Show the answer
The general price level is on the vertical axis and real national output on the horizontal axis, the same axes used for the aggregate demand curve.
Shifts in short run and long run aggregate supply

Name three developments that shift the long run aggregate supply curve to the right.

Show the answer
Net investment that adds to the capital stock, growth in the size or skill of the labour force, and technological progress that raises productivity.
Macroeconomic equilibrium and the effects of demand and supply shifts

How is short run macroeconomic equilibrium identified on the aggregate demand and aggregate supply diagram?

Show the answer
It is at the point where the aggregate demand curve intersects the short run aggregate supply curve, which fixes the equilibrium price level and equilibrium level of real output.

The 10 subtopics

One subtopic is one session. Work down the list.

Subtopic	What it covers	Questions
The circular flow of income, injections and leakages	Recall questions on the circular flow of income between households and firms, injections and leakages, and the equilibrium condition with a worked example.	8
Methods of measuring national income	Recall questions on the income, output and expenditure methods of measuring national income, transfer payments, nominal and real income, GDP and GNI, and understatement of activity.	12
Components of aggregate demand and their determinants	Recall questions on the four components of aggregate demand, their relative sizes, net exports, the determinants of consumption and investment, and the shape of the aggregate demand curve.	10
The slope of the aggregate demand curve and what shifts it	Recall questions on why the aggregate demand curve slopes downwards, movements versus shifts, and how tax cuts, interest rates, depreciation, confidence and spending cuts shift it.	8
Consumption, income and the role of expectations	Recall questions on consumption and real disposable income, wealth effects, the marginal effect of income across households, self-fulfilling expectations and time lags in aggregate demand.	8
Short run and long run aggregate supply curves	Recall questions on short run and long run aggregate supply, the axes and shapes of each curve, the neo-classical vertical long run curve, and supply shocks such as oil prices.	8
Shifts in short run and long run aggregate supply	Recall questions on what shifts short run and long run aggregate supply, supply shocks, education and productivity, movements versus shifts, and why the distinction matters for policy.	11
Macroeconomic equilibrium and the effects of demand and supply shifts	Recall questions on the assumptions of the aggregate demand and aggregate supply model, short and long run macroeconomic equilibrium, demand-pull and cost-push pressure, and the model's limitations.	20
The national income multiplier and marginal propensities	Recall questions on the national income multiplier, marginal and average propensities to consume, save, tax, import and withdraw, and multiplier calculations.	15
The accelerator, the economic cycle and output gaps	Recall questions on the accelerator, how the multiplier and accelerator create the economic cycle, output gap calculations and diagrams, and the causes and consequences of output gaps.	11

Macroeconomics: Aggregate Demand and Aggregate Supply is 111 of the 1,226 questions in the guide.Get the guide, £8

How the guide is worked

Answering a question from memory stores it far better than reading the answer again. The guide runs that as a fixed procedure on one subtopic at a time, about twenty minutes a session.

Step 1 · Closed book
Cover the answers. Work through one subtopic and write down what you can. Leave blanks where you have nothing.
Step 2 · Open book
Go back to the top. Read each printed answer and write it out in full, including the ones you had right.
Step 3 · Closed book again
Same questions, same order, from memory. The gap between pass one and pass three is the session result.

Read the full method, the return schedule and the research behind it.