Answer Practice Questions Final Exam

Answer Practice Questions Final Exam - Answers to Practice...

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Unformatted text preview: Answers to Practice Questions for Final Exam 1. The steeper the short-run aggregate supply curve, a. the smaller the impact of a shift in aggregate demand on equilibrium output b. the larger the value of the spending multiplier c. the larger the impact of a shift in aggregate demand on equilibrium output d. the smaller the change in government spending needed to achieve the desired change in equilibrium output e. the flatter the aggregate demand curve 2. On a graph showing the interest rate (or the expected rate of return on investment) along the vertical axis and investment along the horizontal axis, a. investment demand is autonomous with respect to the interest rate. c. the investment demand line would shift downward if the interest rate increased b. the investment demand line would shift upward if income increased d. the investment demand line slopes downward 3. A fall in the price level will shift the aggregate expenditure curve a. upward and shift the aggregate demand curve to the left b. downward and shift the aggregate demand curve to the left c. upward and shift the aggregate demand curve to the right d. upward and cause a movement along the aggregate demand curve e. downward and shift the aggregate demand curve to the right Exhibit 11-5 4. If an economys natural rate of unemployment is 4.5%, then at point M a. its actual unemployment rate is equal to 4.5%. b. its actual unemployment rate is less than 4.5% Answers to Practice Questions for Final Exam c. its actual unemployment rate is greater than 4.5% d. its aggregate demand curve will automatically shift down over time as the economy self-corrects. 5. In economics, money is an example of the category of resources we call capital. a. False b. True 6. The nation of Omega has an MPC of 0.70. Therefore, Omegas spending multiplier is a. 1.18 b. 2.22 c. 3.33 d. 1.43 e. This question cannot be answered without knowing the MPS 7. An increase in autonomous government purchases will have exactly the same effect on the aggregate demand curve as an equal increase in a. autonomous net taxes b. proportional income taxes c. autonomous investment d. autonomous saving e. transfer payments 8. If the actual price level exceeds the expected price level reflected in long-term contracts, a. firms will find production more profitable than they had expected and will increase the quantity of output supplied b. firms will find production less profitable than they had expected and will decrease the quantity of output supplied c. firms will find production less profitable than they had expected and will increase the quantity of output supplied d. resource owners, because they are making a lower profit than they had expected, will decrease the quantity of output supplied e. unemployment will decrease Exhibit 11-6 Answers to Practice Questions for Final Exam 9. In Exhibit 11-6, the distance between Y 1 and Y 2 is called a. an expansionary gap b. a shortage c. a contractionary gap d. a surplus e. an inflationary gap e....
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This note was uploaded on 10/20/2010 for the course ECON 101 taught by Professor Ohler during the Fall '08 term at Washington State University .

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Answer Practice Questions Final Exam - Answers to Practice...

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