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Unformatted text preview: Ihw3 hm 36.2 28-45 Question1 - Single Correct 1.0 Point Imagine that businesses in general believe that the economy is likely to head into recession and so they reduce capital purchases. Their reaction would initially shift A aggregate demand right. B aggregate demand left. C aggregate supply right. D aggregate supply left. AGGD = C+I+G+NX IF I GOES DOWN (CAPITAL EXPENDITURES GO DOWN) D GOES DOWN Question15 - Single Correct 1.0 Point What causes inflation in the short-run? A shifts (shocks) in aggregate demand or supply B declines in output and production C rising prices D changes in the money supply SHIFT TO RIGHT IN AGG D OR LEFT IN AGG S SKETCH THIS Question21 - Single Correct 1.0 Point If government spending increases, then A the money supply must increase B taxes must increase C borrowing must increase D none of the above G IS DIFFERENT FROM INCREASE IN MONEY SUPPLY; GOVT OFTEN SPENDS MORE THAN IT TAXES (BORROWS); IT DOES NOT HAVE TO BORROW, IT CAN RAISE TAX. HENCE D Figure 33-1...
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- Spring '11