UNIT_3_TEST_fall_2008

UNIT_3_TEST_fall_2008 - UNIT 3 TEST: AGGREGATE DEMAND AND...

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UNIT 3 TEST: AGGREGATE DEMAND AND AGGREGATE SUPPLY 1). Which of the following best describes aggregate supply? A. the amount buyers plan to spend on output B. a schedule showing the relationship between inputs and outputs C. a schedule showing the trade-off between inflation and unemployment D. a schedule indicating the level of real output that will be purchased at each possible price level E. a schedule indicating the level of real output that will be produced at each possible price level 2). A change in which of the following will cause the aggregate demand curve to shift? A. energy prices B. productivity rates C. consumer wealth D. prices of inputs E. prices of consumer goods 3). The short-run aggregate supply curve will shift to the right when A. energy prices increase B. government regulation increases C. prices of inputs decrease D. investment spending decreases E. productivity rates decrease 4). A rightward shift in the aggregate demand curve with a horizontal aggregate supply curve (Keynesian) will cause employment and the price level to change in which of the following ways? Employment Price Level A. increase increase B. increase decrease C. increase no change D. decrease no change E. no change no change 5). An increase in the capital stock will cause the A. aggregate demand curve to shift leftward B. production possibilities curve to shift in C. Phillips curve to shift out D. Long-run aggregate supply curve to shift rightward E. Consumption function to shift down 6). Which of the following is a fiscal policy that would increase aggregate expenditure (or AD) in the Keynesian model? A. a decrease in personal income taxes B. a decrease in government spending C. an increase in corporate income taxes D. a purchase of government bonds by the Federal Reserve E. a sale of government bonds by the Federal Reserve 7). An increase in labor productivity would most likely cause real gross domestic product and the price level to change in which of the following ways? Real GDP Price Level A. increase increase B. increase decrease C. increase no change D. decrease increase E. decrease no change 8 ). In an economy with lump-sum taxes and no international sector, assume that the aggregate supply curve is horizontal. If the marginal propensity to consume is equal to 0.8, which of the following will necessarily be true? A. the average propensity to consume will be less than the marginal propensity to consume B. the government expenditure multiplier will be equal to 5 C. A $10 increase in consumption spending will bring about an $80 increase in disposable income D. Wealth will tend to accumulate in the hands of a few people E. the economy will be running a deficit, since consumption expenditures exceed personal saving.
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9). The aggregate demand curve is downward sloping because as the price level increase the A. purchasing power of wealth decreases B. demand for imports decreases C. demand for interest-sensitive expenditures increases D. demand for domestically produced substitute goods increases
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This note was uploaded on 05/18/2011 for the course ECON 101 taught by Professor Mcdounough during the Spring '11 term at DeVry Westminster.

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UNIT_3_TEST_fall_2008 - UNIT 3 TEST: AGGREGATE DEMAND AND...

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