practice exam 2

practice exam 2 - Exam II Multiple Choice Identify the...

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Exam II Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. ____ 1. Which of the following is not a flow variable? a. the amount of spending by consumers this holiday season b. the number of times a dollar bill is spent in a day c. the amount of sales taxes collected in a state per year d. the number of shares of stock traded on Wall Street per week e. the $100 Susan keeps in her purse, in case an emergency arises ____ 2. If business leaders become pessimistic about future sales and profits, they will __________ spending on plant and equipment, which __________ employment and income and, therefore, their expectations are __________. a. reduce; reduces; fulfilled b. reduce; increases; fulfilled c. reduce; increases; not met d. increase; increases; not met e. increase; reduces; fulfilled ____ 3. Which of the following best describes what the business cycle (or economic fluctuations) shows? a. how the level of firm profits increases as the number of firms decreases b. how consumption by particular households varies with the employment history of the head of household c. how economic activity fluctuates around its long-term growth trend d. how wage increases follow price increases creating a "wage-price spiral" e. how price decreases vary with changes in output ____ 4. A period of sustained decline of output in the economy is known as a(n) a. expansion b. growth phase c. peak d. trough e. contraction ____ 5. Certain economic activities signal forthcoming changes in the economy. These are known as the a. coincidental economic indicators b. GDP implicit price deflator c. lagging economic indicators d. composite of economic activities e. leading economic indicators ____ 6. One explanation of why the aggregate demand curve is downward sloping is that a. as prices fall, nominal income rises and so does the demand for real goods and services b. rising prices reduce people's real wealth and thereby reduce spending c. with falling prices, government decides to spend less to increase the price level d. businesses increase investment spending in response to higher interest rates caused by inflation e. as prices fall, domestically produced goods become more expensive relative to foreign- produced products, which increases production ____ 7. An increase in the price level will cause a. an increase in the quantity of aggregate output supplied b. a decrease in the quantity of aggregate output supplied
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c. a leftward shift in the aggregate supply curve d. a rightward shift in the aggregate supply curve e. a leftward or rightward shift in the aggregate supply curve, depending on the reason for the price change ____ 8. Given the following aggregate demand and aggregate supply schedules, determine the equilibrium level of prices and output. Aggregate Demand
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This note was uploaded on 05/04/2008 for the course ECON 2301 taught by Professor Butler during the Spring '08 term at Blinn College.

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practice exam 2 - Exam II Multiple Choice Identify the...

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