EC140 Midterm 2 Practice Questions

R 17

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Unformatted text preview: ty of the national education system i E) oth A and B are correct b 14) ______ 4 15) onsider the AD/AS model. An increase in government purchases will C have no impact on equilibrium real GDP if A) he marginal propensity to spend is very small. t B) he AS curve is vertical. t C) he AS curve is horizontal. t D) he simple multiplier is very small. t E) he AS curve slopes upward. t 16) onsider the AD/AS model. Suppose there is a decrease in aggregate C demand and, simultaneously, an increase in aggregate supply. The result will be a A) ise in real GDP and a rise in the price level. r B) n indeterminate change in real GDP and a fall in the price level. a C) n indeterminate change in real GDP and a rise in the price level. a D) ise in real GDP and a fall in the price level. r E) ise in real GDP but price level changes will be indeterminate. r 17) onsider the basic AD/AS model. A rise in an input price like unit C labour costs would be expected to create a new macroeconomic equilibrium which in comparison to the original equilibrium has a price level that is A) igher and a real GDP that is higher. h B) ower and a real GDP that is higher. l C) igher and a real GDP that is the same. h D) igher and a real GDP that is lower. h E) ower and a real GDP that is lower. l 18) onsider the following news headline: ʺWorld commodity prices rise C sharply.ʺ Choose the statement below that best describes the likely macroeconomic effects in Canada. (Remember that Canada is both a producer and a consumer of commodities.) A) here is no change in either the AD or the AS curves t B) he AD and AS curves both shift to the left; the effect on the price t level is indeterminate and real GDP decreases C) he AD curve shifts to the right and the AS curve shifts to the left; t the price level rises and the effect on...
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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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