Reference no: EM132293008
1. Which of the following always correspond(s) to a fall in the short run output?
(a) The AS shifts right
(b) The resulting price level falls
(c) The AD shifts up
(d) None of the answers is correct
2. Suppose the multiplier is 2. The AE curve shifts down by 80 due to a fall in investment confifidence. What will happen to the AD curve?
(a) It will shift to the right by 160
(b) It will shift to the left by 160
(c) It will shift to the right by 80
(d) It will shift to the left by 80
3. The aggregate demand is derived from which of the following conditions?
(a) By examining how government policies affffect spending patterns
(b) By examining how price changes affffect interest rates and spending
(c) By summing all micro demand curves
(d) All of the answers are correct
4. The aggregate demand curve is:
(a) Horizontal when there is considerable unemployment in the economy
(b) Vertical if full employment exists
(c) Downward sloping because production costs decrease as real output increases
(d) Downward sloping because of the interest-rate, wealth, and foreign trade effffects
5. Which of the following add(s) to a country's capital stock?
(a) Net investment expenses
(b) Depreciation expenses
(c) A cut in sales taxes
(d) All of the answers are correct
6. Which of the following statements is INCORRECT?
(a) The value added measurement of GDP describes the demand side of the economy
(b) The output measurement of GDP describes the supply side of the economy
(c) The income measurement of GDP describes the supply side of the economy
(d) The expenditure measurement of GDP describes the demand side of the economy
7. If induced spending increases from $300 to $315 when national income increases from $500 to $525, then the (mpc c mpm) is equal to .
(a) 0.7
(b) 0.6
(c) 0.9
(d) 0.8
8. If the mpc is equal to 0.75 and the mpm is equal to 0.15, what can we conclude?
(a) A change in national income does not change induced expenditures
(b) Expenditures are high when our income is very low
(c) A rise in national income will cause a rise in aggregate expenditure
(d) All of the answers are correct
9. What do fifiscal policy and monetary policy accomplish?
(a) They can change aggregate demand to eliminate price changes
(b) They can change potential Y to eliminate output gaps
(c) They can change aggregate demand to eliminate output gaps
(d) All of the answers are correct
10. Which of the following is (are) example(s) of investment expenditure?
(a) Buying bonds issued by Blackberry
(b) Buying a new mannequin for a window display
(c) Putting some money into an interest-bearing savings account
(d) All of the answers are correct
11. If we include discouraged workers when calculating the unemployment rate, what will happen?
(a) The unemployment rate will fall
(b) The employment rate will remain constant
(c) The labour force will remain constant
(d) All of the answers are correct
12. Suppose autonomous expenditure is 230 and induced expenditure is 0.6Y. What is the equilibrium Y?
(a) $600
(b) $575
(c) $625
(d) $700
13. When does potential output Yp change?
(a) When the size of the labour force changes
(b) When government policy changes
(c) When the price level changes
(d) When central bank policy changes
14. In an economy where there are only consumption expenditure and investment expenditure, what is the value of saving when Y=AE?
(a) Some positive value
(b) Equal to investment
(c) Zero
(d) Some negative value
15. Which of the following is (are) goal(s) of government and central bank intervention in the economy?
(a) To maximize economic growth
(b) To minimize economic downturns
(c) To keep inflflation rates low
(d) All of the answers are correct
16. We cannot look at the direction of discretionary fifiscal policy by looking at the changes in the actual fifiscal budget. What is the reason?
(a) Those changes may reflflect changes in the tax revenues as a result of the change in GDP
(b) Those changes may reflflect the changes in consumption habits
(c) Those changes may reflflect changes in the tax revenues as a result of the change in potential GDP
(d) Those changes may reflflect the changes in investment confifidence
17. Suppose that the government decreases its autonomous spending by $100 billion and also decreases its autonomous taxes by $100 billion. How would this affffect the economy?
(a) No effffect on the level of GDP
(b) GDP will fall
(c) GDP may rise or fall depending on the size of the mpc
(d) GDP will rise