Quiz 4 :ch 9 & MPC

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The short-run aggregate supply curve: slopes downward and to the right. graphs as a vertical line. slopes upward and to the right. graphs as a horizontal line.

slopes upward and to the right.

Which one of the following is true, given that MPC represents the marginal propensity to consume and MPS represents the marginal propensity to save? MPC - MPS = 1 MPC/MPS = 1 MPC × MPS = 1 MPC + MPS = 1

MPC + MPS = 1

Which one of the following would not shift the aggregate demand curve? a change in the price level depreciation of the international value of the dollar which would increase imports a decline in the interest rate at each possible price level an increase in income tax rates

a change in the price level

The wealth effect indicates that: an increase in the price level will increase interest rates, and reduce consumption and investment spending. a lower price level will decrease the purchasing power of savings and therefore reduce consumer spending. a higher price level will increase the purchasing power of savings and therefore increase consumer spending. a higher price level will decrease the purchasing power of savings and therefore reduce consumer spending.

a higher price level will decrease the purchasing power of savings and therefore reduce consumer spending.

The long-run aggregate supply curve is a vertical line at full-employment GDP. a horizontal line at the current price level. an upward sloping line. a vertical line at actual GDP.

a vertical line at full-employment GDP.

A rightward shift of the long-run aggregate supply curve is caused by an increase in the average duration of unemployment. advances in technology. an increase in the GDP deflator. a decrease in the labor force participation rate.

advances in technology.

If foreign incomes were to rise so that U.S. exports increased, the U.S.: aggregate demand curve would shift to the right. aggregate supply curve would shift to the left. aggregate supply curve would shift to the right. aggregate demand curve would shift to the left.

aggregate demand curve would shift to the right.

An increase in the money supply will decrease the interest rate, which in turn will: increase consumption and investment and shift the AD curve to the left. increase consumption and investment and shift the AD curve to the right. reduce consumption and investment and shift the AD curve to the left. reduce consumption and investment and shift the AD curve to the right.

increase consumption and investment and shift the AD curve to the right.

The equilibrium price level and level of real GDP occur where: real output is at its highest possible level. export equal imports. the price level is at its lowest level. the aggregate demand and supply curves intersect.

the aggregate demand and supply curves intersect.

All of the following are components of aggregate demand except the level of technology. investment spending. government purchases. consumption spending.

the level of technology

Aggregate demand shows the relationship between the price level and the level of real output. the level of real cash balances and wages. the rate of inflation and the level of imports. the interest rate and the level of exports.

the price level and the level of real output.


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