Chapter 10 Review Questions

Chapter 10 Review Questions - ECN 211: Spring Semester,...

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ECN 211: Spring Semester, 2008 Review Questions Chapter 10 Multiple Choice ____ 1. The aggregate demand schedule shows how real GDP purchased varies with changes in: a. unemployment. b. output. c. the price level. d. the interest rate. ____ 2. The aggregate demand curve: a. shows the level of real GDP purchased in the economy by households, business, government and the rest of the world at different possible price levels during one year. b. shows the level of real GDP produced in the economy at different possible price levels during one year. c. shifts to the left whenever there is an increase in aggregate expenditures. d. slopes upward with respect to the price level. ____ 3. The aggregate demand curve is downward sloping with respect to the price level because: a. an increase in the price level will cause an increase in total expenditures on real GDP. . b. at lower price levels, real wealth decreases, causing a decrease in the quantities of goods and services demanded. c. at lower price levels, interest rates decrease, causing a decrease in the quantities of goods and services demanded. d. at lower price levels, exports increase and imports decrease, causing an increase in the quantities of goods and services demanded. e. increases in the price level do not affect people's real wealth. ____ 4. Which of the following could not be expected to shift the aggregate demand curve? a. A change in the price level. b. An increase in investment spending. c. An increase in government spending. d. A decline in net exports. ____ 5. The aggregate supply curve: a. shows the amount of GDP that profit maximizing firms would choose to produce at different possible price levels, all other things equal. b. is horizontal in the “Keynesian range.” c. is vertical in the :classical range.” d. all of the above. ____ 6. Suppose an increase in government spending causes real GDP to rise without affecting the price level. Over what range of the aggregate supply curve did this shift occur? a. The classical range. b. The intermediate range. c. The Keynesian range. d. This shift could have occurred in any of the three ranges of the aggregate supply schedule listed above. ____ 7. To illustrate the classical argument that "supply creates its own demand," the aggregate supply curve should be drawn: a. downward-sloping with respect to the price level.
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b. upward-sloping (but not vertical) with respect to the price level. c.
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This note was uploaded on 04/02/2008 for the course ECON 211 taught by Professor Keithpaulson during the Spring '08 term at ASU.

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Chapter 10 Review Questions - ECN 211: Spring Semester,...

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