Macro Chapter 11-14 quiz review
The MPS is .2. Equilibrium GDP will decrease by 50 billion if the aggregate expenditures schedule decreases by a. 10 billion b. 15 billion c. 16 billion d.40 billion
Answer 10 billion
an expected increase in the price of consumer goods in the near future will a. decrease ( or shift left) in aggregate demand now b. increase (or shift right) in aggregate demand now c.decrease in the quantity of real output demanded ( or movement up along AD) d. increase in the quantity of real output demanded ( or movement down along AD)
Answer increase ( or shift right) in aggregate demand now
if the real interest rate falls, then the.. a. investment schedule will shift upward b.investment schedule will shift downward c. Pt moves along the investment schedule to the right d. consumption schedule will shift downward
Answer: investment schedule will shift upward
Assuming that MPC is .75, equal increase in government spending and tax collection by 10 billion a. leave the equilibrium GDP unchanged b. increase the equilibrium GDP by 10 billion c. Increase the equilibrium GDP by 2.5 billion d. reduce the equilibrium GDP by 10 billion
Increase the equilibrium GDP by 10 billion
ca= 25+.75 (y-T) Ig= 50 Xn=10 G=70 T=30 (Advanced Analysis) the accompanying equations are for a mixed open economy. The letters Y, Ca,Ig, Xn, G and T stand for GDP, consumption , gross investment, net exports, government purchases, and net taxes respectively. Figures are in billions of dollars if government desired to raise the equilibrium GDP to $650 it could a. raise G by 45 and reduce T by 10 b raise G by 40 and reduce T by 30 c raise G by 30 or reduce t by 40 d raise both G and T by 40
answer: raise G by 30 or reduce T by 40
which would most likely shift the aggregate supply curve? A change in the prices of a. domestic product b. foreign products c. financial assets d. resources
answer: resources
Graphically, the full employment, low inflation , rapid growth economy of the last half of the 1990s is depicted by a a. rightward shift of the aggregate demand curve along a fixed aggregate supply curve b. rightward shift of the aggregate supply curve along a fixed aggregate demand curve c. rightward shift of the aggregate demand curve and a rightward shift of the aggregate supply curve d. leftward shift of the aggregate demand curve and a leftward shift of the aggregate supply curve
answer: rightward shift of the aggregate demand curve and a rightward shift of the aggregate supply curve
Deflation refers to a situation where a. the price level falls; it could be caused by a shift of AD to the left b. the price level falls; it could be caused by a decrease in aggregate supply c.the rate of inflation falls; it could be caused by a shift of As to the right d. the rate of inflation rises; it coul dbe caused by a decrease in aggregate demand
answer: the price level falls; it could be caused by a shift of AD to the left
the long - run aggregate supply analysis assumes that a. input prices are fixed, while product prices are variable b. input prices are variable, while product prices are fixed c. both input and product prices are variables d. both input and product prices are fixed
both input and product prices are variable
if the dollar price of foreign currencies fall (that is, the dollar appreciates), we would expect) a. aggregate demand to decrease and aggregate supply to increase b. both aggregate demand and aggregate supply to decrease c. both aggregate demand and aggregate supply to increase d. aggregate demand to increase supply to decrease
aggregate demand to decrease and aggregate supply to increase
a decrease in consumer spending can be expected to shift the a. aggregate expenditures curve downward and the aggregate demand curve leftward b. aggregate expenditures curve upward and the aggregate demand curve leftward c.aggregate expenditures curve downward and the aggregate demand curve rightward d. aggregate expenditures curve upward and the aggregate demand curve rightward
aggregate expenditures curve downwards and the aggregate demand curve leftwards
if the MPC in an economy is .8 government could close a recessionary expenditure gap of 100 billion by cutting taxes by a. 80 billion b. 100 billion c. 125 billion d. 200 billion
answer: 125 billion
the intersection of the aggregate demand and aggregate supply curve determines the a. productivity level in the economy b. shape of the aggregate demand curve c. per unit cost of production in the economy d. equilibrium level of real domestic output and price
answer: equilibrium level of real domestic output and price
the real balances effect on aggregate demand suggests that a a. lower price level will decrease the demand for money, decrease interest rates, and increase consumption and investment spending b. lower price level will decrease the real value of many financial assets and therefore cause an increase in spending c. lower price level will increase the real value of many financial assets and therefore cause an increase in spending d. higher price level will increase the real value of many financial assets and therefore cause an increase in spending
answer: lower price level will increase the real value of many financial assets and therefore cause an increase in spending
the economy experiences an increase in the price level and an increase in real domestic output. which is a likely explanation a. interest rate have increased b. business taxes have increased c.wages, rent have fallen d. net exports have increased
answer: net exports have increased
In a private closed economy, when aggregate expenditures equal GDP a. consumption equal investment b. Consumption equals aggregate expenditures c. Planned investment equals saving d.Disposable income equals consumption minus saving
answer: planned investment equals saving
