final spring05 answer

final spring05 answer - SECTION_ ECON 162B-90, 91 Spring...

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SECTION______ NAME______________________________ ECON 162B-90, 91 Kenny Christianson Spring 2005 May 12, 2005 FINAL EXAMINATION (A) PART I MULTIPLE CHOICE (30 points) Choose the single best answer. 1. Which of the following will cause an increase in aggregate expenditures in the fixed- price Keynesian model? a. an increase in personal income taxes b. a decrease in government military spending c. an increase in import spending d. a decrease in interest rates e. none of the above 2. In a simple fixed-price Keynesian model, assume that the MPC = 0.9 and the MPI = 0.1. Which of the following will lead to the largest increase in real GDP? a. an increase in government spending of $200. b. an increase in taxes of $200. c. a decrease in taxes of $200. d. a decrease in taxes of $225. e. a balanced budget change of $200 3. The paradox of thrift occurs when a. an increase in saving leads to a decline in real GDP. b. a decrease in saving leads to a decline in GDP. c. real interest rates adjust so that saving equals investment. d. households spend their currency in anticipation of higher future inflation rates. e. thrift institutions were forced to close due to the savings and loan crisis. 4. Assume a model with a Keynesian AD curve and an ordinary, upward-sloping AS curve. An increase in resource prices throughout the economy will lead to a. an increase in AD, prices, and real GDP. b. a decrease in AD, prices, and real GDP. c. an increase in AS and real GDP, and a decline in prices. d. a decrease in AS and real GDP, and an increase in prices. e. a decrease in AS, prices, and real GDP. 5. Assume a model with a Keynesian AD curve and an ordinary, upward-sloping AS curve. Which of the following will cause an increase in the price level and real GDP? a. an increase in AS d. a decrease in AD b. a decrease in AS e. none of the above c. an increase in AD
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6. In every model except the classical model, the aggregate demand curve is downward- sloping because a. a decrease in the price level causes an increase in interest rates and investment spending. b. a decrease in the price level causes an increase in import spending. c. a decrease in the price level causes an increase in real income and consumption spending. d.
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final spring05 answer - SECTION_ ECON 162B-90, 91 Spring...

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