Reference no: EM132312461

1. The graphical relationship between the price level and the amount of real GDP that businesses will offer for sale is known as the _______ curve. A. aggregate demand B. investment supply C. investment demand

2. All else being equal, positive net exports A. cause price inflation. B. increase equilibrium GDP. C. decrease currency demand. D. decrease real GDP.

3. If you consume $1 for every $2 you earn in income, your average propensity to consume (APC) is A. 50%. B. 100%. C. 20%. D. 30%.

4. Which one of the following statements about the federal budget deficit is correct? A. The federal budget deficit is found by subtracting government tax revenues plus government borrowing from government spending in a particular year. B. The federal budget deficit is found by cumulating the differences between government spending and tax revenues over all years since the nation's founding. C. The federal budget deficit is found by subtracting government revenues from the noninvestment-type government spending in a particular year. D. The federal budget deficit is found by subtracting government tax revenues from government spending in a particular year.

5. Which one of the following statements about lump-sum taxes is correct? A. A lump-sum tax means that tax revenues vary directly with GDP. B. A lump-sum tax means that tax revenues vary inversely with GDP. C. A lump-sum tax means that the same amount of tax revenue is collected at each level of GDP. D. A lump-sum tax means that the tax applies only to one time period

6. Who owns the largest share of the US public debt?

A. Foreign entities B. State and local governments C. US individuals D. US government agencies

7. Which one of the following statements about the interest-rate effect is correct? A. The interest-rate effect suggests that an increase in the price level will increase the demand for money, increase interest rates, and decrease consumption and investment spending. B. The interest-rate effect suggests that an increase in the price level will decrease the demand for money, reduce interest rates, and increase consumption and investment spending. C. The interest-rate effect suggests that an increase in the price level will increase the demand for money, reduce interest rates, and decrease consumption and investment spending. D. The interest-rate effect suggests that a decrease in the supply of money will increase interest rates and reduce interest-sensitive consumption and investment spending.

8. A reasonable investor will make an investment if the expected rate of return equals

A. his or her marginal propensity to save. B. the real interest rate. C. the nominal interest rate. D. the inflation rate.

9. A high multiplier means that the initial change in spending is _______ relative to the change in real GDP.

A. high B. approximately equal C. low D. unrelated

10. At equilibrium GDP

A. inflation equals total expenditures. B. the increase in aggregate expenditure is equivalent to the real interest rate. C. the total quantity of goods produced exceeds net exports. D. the total quantity of goods produced equals the total quantity of goods purchased.