test 2

If the marginal propensity to consume is 0.6, then the spending multiplier is:

2.5

For which growth rate would the Rule of 70 be least accurate?

30%

The Rule of 70 states that the number of years required for a value to double in size is:

70 divided by the growth rate.

What happens if business expectations improve?

Aggregate supply shifts right.

______ are components of consumer spending that affect aggregate demand.

Taxes

Which of the following will NOT shift the aggregate supply curve to the left?

a decrease in corporate taxes

A(n) __________ in government spending, a __________ domestic currency, and ________ interest rates will shift a country's aggregate demand to the left.

decrease; stronger; higher

During the recent economic downturn, as incomes dropped and food prices rose, the number of people living in extreme poverty increased.

false

In the Keynesian model, the price level is ___________; in the aggregate demand and supply model, the price level is _______________.

fixed; flexible

economic growth

is the most important factor influencing a country's standard of living -use real values instead of nominal values

Increased taxes will shift the aggregate demand curve to the _____ and _____ output demanded.

left; decrease

A breakthrough in solar energy research that halves the cost of electricity will:

shift the aggregate supply curve to the right.

The idea that new spending creates more new spending is known as:

the multiplier effect.

In the Keynesian aggregate expenditure model, which variable is assumed to be fixed?

the price level

Cost-push inflation is a situation in which:

the short-run aggregate supply curve shifts leftward.

Aggregate expenditures are equal to:

the total of consumption plus investment plus government expenditures plus exports minus imports.

If a country's growth rate is 3%, then it will take about 23 years for its output to double.

true

Short-run growth occurs when an economy makes use of underutilized resources.

true

The compounding effect makes debt repayment significantly higher over time.

true