Economics Final Exam Study Guide Part 2

If personal income taxes and business taxes increase then this will _________ aggregate demand and aggregate supply.

decrease

When national income in other nations decreases, aggregate demand in our economy _______ because our exports will _________.

decrease; decrease

The aggregate demand curve shows the amount of

real output that will be desired at each possible price level

Refer to the graph for a private closed economy. The equilibrium level of GDP in this economy is $ ________ billion.

$ 450 billion

Henry deposits $2,000 in currency in the First Street Bank. Later that same day, Jane Harris negotiates a loan for $5,400 at the same bank. After these transactions, the supply of money increased by

$ 5,400

The consumer price index was 177.1 last year and 179.9 this year. Therefore, the current rate of inflation is about _______ percent.

1.6

The table contains information about the hypothetical economy of Scoob. All figures are in millions. The Labor force in Scoob is

102 million

Refer to the diagrams, in which AD 1 and AS 1 are the "before" curves and AD 2 and AS 2 are the "after" curves. Other things equal, inflation is absent in

A and C

Which of the diagrams for the U.S. economy best portrays the effects of a substantial reduction in government spending?

D (one AS all going left)

In an inflationary expenditure gap, the equilibrium level of real GDP is greater than

full-employment GDP

The short-run aggregate supply curve becomes _______ at output levels above the full-employment output.

greater

The immediate-short-run aggregate supply curve is

horizontal

Investment and saving are, respectively,

injections and leakages

Refer to the diagram for a private closed economy. The upward shift of the aggregate expenditures schedule from (C+Ig) 1 to (C +Ig) 2 reflects an increase in __________ expenditures.

investment

A recessionary expenditure gap exists if the aggregate expenditures schedule

lies below the 45 degree line at the full-employment GDP

Cost-push inflation may be caused by

negative supply shock

Money functions as a store of __________, a unit of _______, and a medium of _________.

store of value, unit of account, and a medium of exchange

The multiple by which the commercial banking system can increase the supply of money on the basis of each dollar of excess reserves is equal to

the reserve ratio

With mild demand-pull inflation, the economy's output level would tend to be pulled

up by the increase in total spending

The long-run aggregate supply curve is

vertical