exam2f11_ans - Economics 112 Principles of Macroeconomics...

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Economics 112 Professor Rafferty Principles of Macroeconomics Fall 2011 Exam #2 Multiple Choice Questions ( 2 points each ) 1. Which of the following will shift the aggregate demand curve to the left, holding everything else constant? a. a decrease in expected profits for firms. b. a decrease in interest rates. c. an increase in net exports. d. an increase in disposable income. 2. Potential GDP refers to the level of 3. Because of diminishing marginal returns, an economy can continue to increase real GDP per hour worked only if: a. there are decreases in human capital. b. the per-worker production function shifts downward. c. there continue to be decreases in capital per hour worked. d. there is technological change. 4. Increasing growth rates of GDP per capita and sustaining these growth rates in an economy can: 5. The basic aggregate demand and aggregate supply curve model helps explain 6. Because of the slope of the aggregate demand curve we can say that: a. a decrease in the price level leads to a lower level of real GDP demanded. b. an increase in the price level leads to a higher level of real GDP demanded. c. an increase in the price level leads to a higher level of real GDP demanded. d. a decrease in the price level leads to a higher level of real GDP demanded. 1
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7. Workers expect inflation to rise from 2% to 4% next year. As a result this should: 8. Which of the following can explain why some countries have not experienced relatively high growth rates in real GDP per capita despite relatively low initial levels of real GDP per capita?
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