Pre-Test Chapter 10 ed17 - Pre-Test Chapter 10 ed17...

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Prof Keep Econ Chap 10 ed 17 Pre-Test Chap 10 Page 1 of 8 Pre-Test Chapter 10 ed17 Multiple Choice Questions 1. Refer to the above diagrams. Assuming a constant price level, an increase in aggregate expenditures from AE 1 to AE 2 would: A. move the economy from A to C along AD 1 . B. move the economy from C to A along AD 1 . C. increase aggregate demand from AD 1 to AD 2 . D. decrease aggregate demand from AD 2 to AD 1 .
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Prof Keep Econ Chap 10 ed 17 Pre-Test Chap 10 Page 2 of 8 2. The foreign purchases effect: A. shifts the aggregate demand curve rightward. B. shifts the aggregate demand curve leftward. C. shifts the aggregate supply curve rightward. D. moves the economy along a fixed aggregate demand curve. 3. Refer to the above diagrams, in which AD 1 and AS 1 are the "before" curves and AD 2 and AS 2 are the "after" curves. Cost-push inflation is depicted by: A. panel (A) only. B. panel (B) only. C. panel (C) only D. panels (B) and (C). 4. When aggregate demand declines, wage rates may be inflexible downward, at least for a time, because of: A. the foreign purchases effect. B. inflexible product prices. C. wage contracts. D. the wealth effect. Answer the next question(s) on the basis of the following information about the relationship between input quantities and real domestic output in a hypothetical economy:
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Prof Keep Econ Chap 10 ed 17 Pre-Test Chap 10 Page 3 of 8 5. The level of productivity in the above economy is: A. 2. B. .5. C. 4. D. 200. 6. Which of the following is a true statement? A. firms and resource suppliers generally find it easier to reduce prices than to raise them. B. as the price level increases, interest rates will rise and therefore consumption and investment spending will also rise. C. an initial increase in aggregate demand may cause a further increase in aggregate demand because higher prices mean higher incomes. D. a decline in aggregate demand will primarily affect real output and employment if prices are inflexible downward. Suppose that real domestic output in an economy is 20 units, the quantity of inputs is 10, and the price of each input is $4. Answer the following question(s) on the basis of this information. 7. Refer to the above information. Given an increase in input price from $4 to $6, we would expect the aggregate: A. supply curve to shift to the left. B. supply curve to shift to the right.
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This note was uploaded on 02/07/2010 for the course ECONOMICS econ301 taught by Professor Mankiw during the Spring '10 term at American College of Computer & Information Sciences.

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Pre-Test Chapter 10 ed17 - Pre-Test Chapter 10 ed17...

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