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MC_II_with_answer - Multiple Choice Question Practice 1 An...

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Multiple Choice Question Practice 1. An earthquake destroyed 50% of the Ma Idavian manufacturing base. The Ma Idavian government decided to use a expansionary fiscal policy to counter the effects of the earthquake on the economy. The use of the expansionary fiscal policy would have caused A) both the price level and the output level to be lower than what they would have been without the policy action. B) both the price level and the output level to be higher than they would have been without the policy action. C) the price level to be lower and the output level to be higher than they would have been without the policy action. D) the price level to be higher and the output level to be lower than they would have been without the policy action. 2. The present value (PV) is the dollar value today of _____. 3. MPC=0.8. The government wants to raise output by $100 million. It could achieve that goal by doing any of the following except 4. An increase in interest rates increases: 5. If the annual interest rate is i = 0.01 (1 percent), the present value of the future sum of $100 expected to be three years from today is: A) $93. B) $94. C) $96. D) $97.
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