ECON252 Practice Exam_final - Chapters 15-16 (with KEY)

Risesofirmsincreaseinvestment b

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Unformatted text preview: tion spending is $5,200 when income is $8,000. • Consumption spending is $5,536 when income is $8,400. 19. Refer to Scenario 34‐2. The multiplier for this economy is a. 6.00. b. 6.25. c. 8.40 d. 9.00. 20. According to liquidity preference theory, a decrease in the price level causes the interest rate to a. increase, which increases the quantity of goods and services demanded. b. increase, which decreases the quantity of goods and services demanded. c. decrease, which increases the quantity of goods and services demanded. d. decrease, which decreases the quantity of goods and services demanded. 21. Other things the same, an increase in the amount of capital firms wish to purchase would initially shift a. aggregate demand right. b. aggregate demand left. c. aggregate supply right. d. aggregate supply left. 22. Other things the same, when the price level rises, interest rates a. rise, so firms increase investment. b. rise, so firms decrease investment. c. fall, so firms increase investment. d. fall, so firms decrease investment. 23. Which of the following sequences best explains the negative slope of the aggregate‐demand curve? a. price level ‐ Þ demand for money ‐ Þ equilibrium interest rate ‐ Þ quantity of goods and services demanded ˉ b. price level ‐ Þ demand for money ˉ Þ equilibrium interest rate ‐ Þ quantity of goods and services demanded ˉ c. price level ˉ Þ demand for money ˉ Þ equilibrium interest rate ‐ Þ quantity of goods and services demanded ˉ d. price leve...
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This test prep was uploaded on 03/03/2014 for the course ECON 252 taught by Professor Robertholand during the Spring '08 term at Purdue University.

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