EC140 Midterm 2 Practice Questions

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Unformatted text preview: real GDP is indeterminate D) he AD curve shifts to the left and the AS curve shifts to the right; t the price level falls and the effect on real GDP is indeterminate E) he AD and AS curves both shift to the right; the effect on the price t level is indeterminate and real GDP increases 19) uppose the government embarks on an infrastructure program, S spending $8 billion on the construction of new roads and bridges. What is the size of the multiplier if the AS curve is vertical? A) nfinity i B) 0 C) reater than 1 g D) ess than 1 l E) nsufficient information to solve i 15) ______ 16) ______ 17) ______ 18) ______ 19) ______ 5 20) hich of the following characteristics define the short run in W macroeconomics? A) actor prices adjust to output gaps, and technology and factor F prices are changing. B) actor prices are exogenous, technology and factor prices are F endogenous. C) actor prices adjust to output gaps, and technology and factor F supplies are constant. D) actor prices are exogenous, and technology and factor supplies F are changing. E) actor prices are exogenous, and technology and factor supplies F are constant. FIGURE 23-2 21) efer to Figure 23-2. Suppose that an increase in government purchases R by 50 causes the AD curve to shift to the right, as shown. The simple multiplier is ________ and the multiplier is ________. A) ; 1.2 6 B) ; 3.2 4 C) ; 2.8 4 D) .8; 1.2 2 E) ; 1.2 4 22) efer to Figure 23-2. Suppose that an increase in government purchases R caused the AD curve to shift to the right, as shown. If the simple multiplier in this model is 5, then how much was the increase in government purchases? A) 0 4 B) ot enough information to know n C) 2 1 D) 0 5 E) 0 3 20) ______ 21) ______ 22) ______ 6 23) f wages rise faster than increas...
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This note was uploaded on 08/14/2013 for the course EC 140 taught by Professor Peter during the Winter '10 term at Wilfred Laurier University .

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