MC_II_with_answer

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 _____. A) a future sum of money . B) a bond. C) a dividend payment. D) a stock. . 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 A) simultaneously raising government spending by $40 million and cutting taxes by $50 million. B) cutting taxes by $25 million. C) simultaneously raising government spending by $100 million and raising taxes by $100 million. D) Raising government spending by $20 million. 4. An increase in interest rates increases: A) consumption, investment and net export components of aggregate expenditure. B) the demand for money by portfolio managers. C) government expenditure. D) the value of the Canadian dollar. 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. 6. Suppose that an economy is operating at less than full employment. An increase in AD will result in: 1
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A) an increase in aggregate output and perhaps a decrease in the general price level. B) an increase in the general price level and perhaps a decrease in aggregate output. C)
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This test prep was uploaded on 04/18/2008 for the course ECON 203 taught by Professor Islam during the Winter '08 term at Concordia Canada.

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MC_II_with_answer - Multiple Choice Question Practice 1. An...

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