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

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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.
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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,
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This note was uploaded on 12/06/2011 for the course ECON 1110 taught by Professor Heatherklinger during the Fall '08 term at North Texas.

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

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