ECON2010 test 2 study guide

ECON2010 test 2 study guide - ECON2010 test 2 study guide...

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ECON2010 test 2 study guide 1) In a closed economy public saving plus private saving is equal to a- The budget deficit b- The budget surplus c- Taxes minus transfers d- Investment 2) Which of the following is one explanation as to why the aggregate demand curve slopes downward? a- Decreases in the price level raise the interest rate and increase consumption spending. b- Decreases in the price level raise the interest rate and increase investment spending. c- Decreases in the price level raise real wealth and increase consumption spending. d- Decrease in the U.S. price level relative to the price level in other countries lower net exports. 3) The automatic mechanism _______ the price level in the case of ________ and _______ the price level in the case of _________. a- lowers; recession; raises; expansion b- raises; expansion; lowers; recession c- raises; recession; lowers; expansion d- lowers; expansion; lowers; recession 4) A decrease in the price level in the U.S. will have what effect on the aggregate expenditure line? a- Aggregate expenditure will shift downward. b- Aggregate expenditure will become steeper. c- Aggregate expenditure will shift upward. d- Aggregate expenditure will not be affected by an increase in the price level in the U.S. 5) An unplanned increase in inventories results from a- Actual investment that is greater than planned investment b- An increase in planned investment c- A decrease in planned investment d- Actual investment that is less than planned investment 6) Under which of the following circumstances would private saving be positive in a closed economy? a- Y= $10 trillion; C= $5 trillion; TR= $2 trillion; G= $2 trillion; public saving= $1 trillion. b- Y= $6 trillion; C= $2 trillion; TR= $8 trillion; G= $3 trillion; public saving= $1 trillion.
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c- Y= $8 trillion; C= $2 trillion; TR= $4 trillion; G= $2 trillion; public saving= $4 trillion. d- Y= $9 trillion; C= $5 trillion; TR= $1 trillion; G= $1 trillion; public saving= $3 trillion. 7) In the dynamic aggregated demand and aggregate supply model, if AD shifts faster than AS: a- Disinflation occurs. b- Inflation occurs. c- Stagflation occurs. d- Deflation occurs. 8) Which of the following will not occur as the result of a decrease in the net taxes? a-
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ECON2010 test 2 study guide - ECON2010 test 2 study guide...

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