SQ-Part3-Sp09-KEY

SQ-Part3-Sp09-KEY - 1 Sample Questions, Part 3, Chapters...

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1 Sample Questions, Part 3, Chapters 13-14 KEY 4/22/09 P (1) P (2) A S A S A D A D FE Y Y FE Y Y P (3) P (4) A S A S A D A D FE Y Y Y In the AS/AD model find the effects of the following changes. In the graphs above the dashed lines represent the new curves. Your choices are (1)Graph 1 (2)Graph 2. (3)Graph 3. (4)Graph 4. (5)None of the above, as the answer cannot be determined without more information. [1]An increase in autonomous investment will cause ___ 1 __. [2]An autonomous increase in the price of a key input into the production process, such as oil, will cause ___ 4 __. [3]An increase in taxes will cause ___ 2 ___. [4]An open market sale by the Fed will cause ___ 2 __. [5]A decrease in nominal wages will cause __ 3 ___. [6]A decrease in government purchases accompanied by an equal decrease in taxes will cause ___ 2 __. (Hint: Find the total effects on A .) [7]A decrease in the discount rate will cause __ 1 ___.
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[8]Which of the following sequences results from an increase in the price level? 1. The real money supply curve shifts to the left. 2. The interest rate increases. 3. Investment and consumption demand decrease. 4. Each of 1-3. 5. Neither of 1-3. [9] Stagflation is caused by 1. a negative supply shock 2. a positive supply shock 3. a negative demand shock 4. a positive demand shock [10]If consumers enjoy an increase in wealth due to stock market gains, which of the following combinations of events will mostly likely take place? 1. a downward shift of the aggregate expenditure line and a rightward shift of the AD curve 2. a downward shift of the aggregate expenditure line and a rightward shift of the AD curve 3. an upward shift of the aggregate expenditure line and a leftward shift of the AD curve 4. an upward shift of the aggregate expenditure line and a rightward shift of the AD curve [11]If the Fed conducts an open market purchase of bonds, which of the following will happen? 1. The interest rate will decrease, the aggregate expenditure line will shift upward, and the aggregate demand curve will shift rightward. 2. The interest rate will decrease, the aggregate expenditure line will shift downward, and the aggregate demand curve will shift rightward. 3. The interest rate will increase, the aggregate expenditure line will shift downward, and the aggregate demand curve will shift leftward. 4. The interest rate will decrease, the aggregate expenditure line will shift upward, and the aggregate demand curve will shift leftward. [12]Why does a change in GDP affect unit costs and the price level? 1. As GDP increases, productivity increases. 2. As GDP increases the price of non-labor inputs increases. 3. As GDP increases, economies of scale allow for lower unit costs 4. Each of 1-3. 5.
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This note was uploaded on 12/09/2009 for the course ECON 2006 taught by Professor Rdcothren during the Spring '08 term at Virginia Tech.

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SQ-Part3-Sp09-KEY - 1 Sample Questions, Part 3, Chapters...

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