Sara Seals Macro Exam 4

If the MPC is 0.50 and there are no crowding-out or accelerator effects, then an initial increase in aggregate demand of $95 billion will eventually shift the aggregate demand curve to the right by

$190 billion

In a certain economy, when income is $100, consumer spending is $60. The value of the multiplier for this economy is 4. It follows that, when income is $101, consumer spending is

$60.75

If velocity = 8, the quantity of money = 2,300, and the price level = 2.25, then the real value of output is approximately

$8,178

if the price level increased from 130 to 150, then what was the inflation rate?

15.4 percent

Katarina puts money into an account. One year later she sees that she has 6 percent more dollars and that her money will buy 4 percent more goods. The nominal interest rate was

6 percent and the inflation rate was 2 percent

In 2008 the United States was in recession. which of the following things would you not expect to have happened?

Increased real GDP

Last year, Jane spent all of her income to purchase 200 units of corn at $5 per unit. This year, she spent all of her income to purchase 180 units of corn at $6 per unit

Jane's nominal income increased this year, but her real income decreased

which of the following would not be an expected response from a decrease in the price level and so help to explain the slope of the aggregate-demand curve?

With prices down and wages fixed by contract, Fargo Concrete Company decides to lay off workers

other things the same, as the price level decreases it induces greater spending on

both net exports and investment

suppose there is a tax decrease. to stabilize output, the Federal Reserve could

decrease the money supply

From 2001 to 2005 there was a dramatic rise in the value of houses. If this rise made homeowners feel wealthier, then it would have shifted aggregate

demand; right

if Y and V are constant and M doubles, the quantity equation implies that the price level

doubles

when the Fed buys bonds the supply of money

increases and so aggregate demand shifts right.

according to the liquidity preference theory, an increase in the overall price level of 10 percent

increases the equilibrium interest rate, which in turn decreases the quantity of goods and services demanded

when the Consumer Price Index decreases from 140 to 125

less money is needed to buy the same amount of goods, so the value of money rises

The sticky-wage theory of the short-run aggregate supply curve says that when the price level rises more than expected, production is

more profitable and employment and output rises

The effect of an increase in the price level on the aggregate-demand curve is represented by a

movement to the left along a given aggregate-demand curve

when there is an excess supply of money

people will try to get rid of money causing interest rates to fall. Investment increases

in countries that have minimum wages and require a lengthy and costly process to get permission to open a business

reducing the minimum wage and the time and cost to open a business would both shift the long-run aggregate supply curve to the right

Assume the MPC is 0.80. assume there is a multiplier effect and that the total crowding-out effect is 14 billion. an increase in government purchases of 90 billion will shift aggregate demand to the

right by 436 billion

the economy of Umrica uses gold as its money. if the government discovers a large reserve of gold on their land the

supply of money increases, the value of money falls, and prices rise