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d. None of the above is correct. 3 Name: ________________________ ID: A 14. If the MPC is 2/3 then the multiplier is
a. 3/2, so a $100 increase in government spending increases aggregate demand by $150.
b. 3/2, so a $100 increase in government spending increases aggregate supply by $150.
c. 3, so a $100 increase in government spending increases aggregate demand by $300.
d. 3, so a $100 increase in government spending increases aggregate supply by $300. 15. An economic contraction caused by a shift in aggregate demand remedies itself over time as the expected price level
a. rises, shifting aggregate demand right.
b. rises, shifting aggregate demand left.
c. falls, shifting aggregate supply right.
d. falls, shifting aggregate supply left.
Figure 34‐3. 16. Refer to Figure 34‐3. For an economy such as the United States, what component of the demand for goods and services is most responsible for the decrease in output from Y1 to Y2? a. consumption
c. net exports
d. government spending 17. In 1986, OPEC countries increased their production of oil. This caused
a. the price level to rise.
b. aggregate supply to shift right.
c. unemployment to rise.
d. None of the above is correct. 4 Name: ________________________ ID: A 18. During a recession the economy experiences
a. rising employment and income.
b. rising employment and falling income.
c. rising income and falling employment.
d. falling employment and income.
Scenario 34‐2. The following facts apply to a small, imaginary economy. • Consump...
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- Spring '08