Chapter_26 - YourResultsfor"SelfStudyQuiz SiteTitle...

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Your Results for: "Self-Study Quiz" Print this page Site Title: Principles of Economics, Eighth Edition Book Title: Principles of Economics, 8/e Book Author: Case/Fair Location on  Site: Chapter 26 > Self-Study Quiz Date/Time  Submitted: February 8, 2012 at 11:56 AM  (UTC/GMT) Summary of Results 28% Correct  of 40 Scored items: 11 Correct:  28% 29 Incorrect:  73% 3 questions not scored. 40 scored questions. More information about scoring 1. Money demand will increase if the  following declines: Your Answer: The price level. Correct Answer: The interest rate.   Incorrect. Money demand will increase if the real level of output (income) increases, the  price level increases, or the interest rate declines. 2. Let  P  equal the aggregate price  level. Assuming that  G,  T,  and  MS  remain the same, the  impact of an increase in the price  level on the economy can be  described as follows:  Your Answer: Correct Answer:   Incorrect. A higher interest rate does not cause investment to increase.
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3. Along the aggregate demand curve,  each point represents:  Your Answer: Macroeconomic equilibrium, or eq economy. Correct Answer: Simultaneous equilibrium in both    Incorrect. The AD curve represents points where only the goods and money markets are in  equilibrium, not all markets of the economy. 4. The  aggregate demand  curve  represents: Your Answer: A market demand curve. Correct Answer: A negative relationship between a price level.   Incorrect. The AD curve is not a market demand curve, and it is not the sum of all market  demand curves in the economy. 5. Among the differences between  a  market demand curve  and  an  aggregate demand curve  is that  in drawing a market demand curve  we assume that: Your Answer: When the price of the good in que remains the same. Correct Answer: The price of the good in question    Incorrect. When the price of the good in question increases, nominal income remains the  same; therefore, real income decreases.
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6. Behind the explanation as to why  the aggregate demand has a  negative slope is the fact that when  the aggregate price level increases, Your Answer:   Correct. Aggregate demand falls when the price level increases because the higher price  level causes the demand for money (Md) to rise. With the money supply constant, the  interest rate will rise to reestablish equilibrium in the money market. It is the higher interest  rate that causes aggregate output to fall. 7.
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Chapter_26 - YourResultsfor"SelfStudyQuiz SiteTitle...

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