Week 09, Day 2 - Quiz 2

Week 09, Day 2 - Quiz 2 - QUIZ #2 This Quiz covers topics...

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This Quiz covers topics from chapters 9, 10, and 12. Choose the correct answer (one choice) for each of the following questions. 1. Households can save more if a) government transfers are lower. b) consumer spending is higher. c) taxes are lower. 2. According to the market for loanable funds, if the government decreases its budget deficit, private saving will ________ and business investment will ________ because the interest rate is ________. a) increase, increase, higher e) increase, increase, lower b) increase, decrease, higher f) increase, decrease, lower c) decrease, increase, higher g) decrease, increase, lower d) decrease, decrease, higher h) decrease, decrease, lower 3. If interest rates increase, the equilibrium price of stocks ________ and the equilibrium quantity of stocks exchanged ________. a) will increase, may increase or decrease or not change. b) will decrease, may increase or decrease or not change. c) may increase or decrease or not change, will increase. d) may increase or decrease or not change, will decrease. 4. A decrease in wealth arising from a higher aggregate price level causes a ________ the aggregate demand curve. A decrease in wealth caused by lower prices for stocks or houses causes a ________ the aggregate demand curve. a) shift of, movement along c) movement along, movement along b) shift of, shift of d) movement along, shift of 5. The net export effect explains why an increase in ________ causes the country's trade balance (X – IM) to ________. a) the value of the country's currency relative to foreign currencies, increase b) the value of the country's currency relative to foreign currencies, decrease c) the aggregate price level, increase d) the aggregate price level, decrease e) foreign incomes, increase f) foreign incomes, decrease 6. Which of the following would cause the economy's potential output to increase? a) an increase in foreign incomes b) an increase in wealth c) an increase in government purchases of infrastructure d) an increase in government transfers e) a decrease in commodity prices 7. Suppose the marginal propensity to consume is .6 and there are no taxes and trade. What is the third round increase in consumer spending that arises from a $50 million increase in investment spending? a) $10 million d) $30 million g) $125 million b) $10.8 million e) $36 million h) $150 million c) $18 million f) $83.3 million 8. What is the size of the simple multiplier in the previous question? a)
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Week 09, Day 2 - Quiz 2 - QUIZ #2 This Quiz covers topics...

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