ECON252_Practice_Exam_3A_-_Chapters_15-16_with_KEY_

ECON252_Practice_Exam_3A_-_Chapters_15-16_with_KEY_ -...

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Name: ________________________ Class: ___________________ Date: __________ ID: A 1 Practice Questions Chapters 15 & 16 Multiple Choice Identify the choice that best completes the statement or answers the question. 1. When the price level falls a. The interest rate falls because people will want to hold more money and so sell bonds. b. Firms will want to spend more on new business buildings and business equipment and households will want to spend more building new homes. c. Both A and B are correct. d. None of the above are correct. 2. Aggregate demand shifts right when the government a. raises personal income taxes. b. increases the money supply. c. repeals an investment tax credit. d. All of the above are correct. 3. An increase in the MPC a. increases the multiplier, so that changes in government expenditures have a larger effect on aggregate demand. b. increases the multiplier, so that changes in government expenditures have a smaller effect on aggregate demand. c. decreases the multiplier, so that changes in government expenditures have a larger effect on aggregate demand. d. decreases the multiplier, so that changes in government expenditures have a smaller effect on aggregate demand. 4. The quantity of money has no real impact on things people really care about like whether or not they have a job. Most economists would agree that this statement is appropriate concerning a. both the short run and the long run. b. the short run, but not the long run. c. the long run, but not the short run. d. neither the long run nor the short run. 5. Which of the following shifts aggregate demand to the left? a. The price level rises. b. The price level falls. c. The dollar depreciates for some reason other than a change in the price level. d. Stock prices fall for some reason other than a change in the price level.
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Name: ________________________ ID: A 2 Figure 34 4. On the figure, MS represents money supply and MD represents money demand. 6. Refer to Figure 34 4 . Which of the following events could explain a decrease in the equilibrium interest rate from r 3 to r 1 ? a. a decrease in the price level b. a decrease in the number of firms building new factories and buying new equipment c. an increase in the price level d. an increase in the number of firms building new factories and buying new equipment 7. Refer to Figure 34 4 . Which of the following events could explain a shift of the money demand curve from MD 1 to MD 2 ?
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ECON252_Practice_Exam_3A_-_Chapters_15-16_with_KEY_ -...

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