test 2 - l NAME(LASr,rrnsr Moxfte\d $qra ECONOMICS 1110 rD...

Info icon This preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
l NAME (LASr,rrnsr) Moxfte\d, $qra rD # t0b9 78^?2 ECONOMICS 1110 EXAM II, FALL 2010 YERSION B INSTRUCTIONS: Select the best response to each item and bubble in the corresponding letter on your answer sheet. Each correct response is worth 3.75 points out of 150 possible points. l. {eteris paribus, an increase inthe domestic price level causes: (} an increase in the quantity demanded of imports and a decrease in the quantity demanded of exports. \ a decrease in the interest rate and an increase in business and household bonowing. c: an increase in the purchasing power of a given money income. \ alloftheabovearecorrect. Use the following graph to answer questions 2 and3. Price Level Real GDP The graph above depicts an economy: &t inarecessionarygap. 6) in an inflationary gap. c. at a full-employnrent equilibrium. d. on its long-run aggregate supply curve. Which of the following describes what will happen if the economy depicted above is self- regulating? @ Labor market surpluses put downward pressure on wages, resulting in aright'ward shift in short-run aggregate supply. \ Labor market shortages put upward pressure on wages, resulting in a leftward shift in aggregate demand. '::c. e Labor market shortages put upward pressure on wages, resulting in a leftward shift in short-run aggregate supply. \. Labor market surpluses put downward pressure on wages, resulting in arightward shift in aggregate demand. 2. el.
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
paribus, a decrease in the price level leads to: a decrease inthe purchasing power of real GDP. an increase in the quantity demanded of real GDP. an increase in the demand for real GDP. a decrease in the quantity demanded of real GDP. o 5, All other things equal, a decrease in investnent spending will shift inthe shortrun short-run aggregate supply; right aggregate demand; right aggregate demand;left short-run aggregate supply; left long-run aggregate supply (LRAS) curve is: vertical at short-nrn equilibritrm real GDP. vertical at natural real GDP, or potential output. horizontal at short-run equilibriumreal GDP. horizontal at natural real GDP, or potential output. Assurning the short-run aggegate supply curve is upward sloping, a decrease in aggregate demand (while short-run aggregate supply remains unchanged) risults in a *- price level, _ output (real GDP), ffid_r-rnemployment. Ceteris \ e \ d. 4. 7. a. b. higher; higher; higher higher; higher; lower lower;lower; higher lower; lower; lower o8. c9. The @ b. \ \ 10. a) 2 \ ]9' Hsj:t 0 The a. q \ .If the actual unemployment rate is less than the natural rate of unemploymen! a(n): \ inflationary gap exists and actual real GDP is less than natural real GDP- N inflationary gap exists and actual real GDP is greater than natural real GDP. (} recessionary gap exists and actual real GDP is less than natural real GDP, d. recessionary gap exists and actual real GDP is greater than natural real GDP.
Image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern