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Assuming thataggregateoutputisdemand

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Unformatted text preview: ty cost of Andreaʹs four - year university degree? A) zero B) $100 000 C) $120 000 D) $148 000 E) $168 000 19) In the simple macro model, desired investment is assumed to be autonomous with respect to national income. Which of the following will cause a shift of the investment function? A) a decrease in interest rates B) an increase in firmsʹ optimism about the economy C) an expectation of a downturn in economic performance D) all of the above E) none of the above 20) In Shoetown, a rancher takes $0 worth of inputs and produces animal skins, which he sells to the tannerfor $400. The tanner then sells leather to the shoemaker for $700, and the shoemaker then sells $1 200 worth of shoes. The value added from these transactions is A) $ 800. B) $1 000. C) $1 200. D) $2 300. E) $2 500. 5 21) Consider the following news headline: ʺCanadians develop a greater taste for foreign vacations.ʺ Assuming that aggregate output is demand - determined, what effect will this have, all other things equal, on the AE function and on equilibrium national income? A) the AE function will shift down parallel to itself and equilibrium national income will fall. B) the AE function will rotate upward (become steeper) and equilibrium national income will rise. C) the AE function will rotate downward (become flatter) and national income will fall. D) the AE function will shift up parallel to itself and equilibrium national income will rise. E) there will be no change in the AE function or in equilibrium national income. 22) Suppose exports are $200 and imports are given by IM = 0.2Y. At what level of national income will net exports equal zero? A) $0 B) $200 C) $250 D) $1000 E) $1250 23) Suppose that supply for some good increases and that simultaneously the demand for the same good decreases. The result would be A) a decrease in P and an indeterminate change in Q. B) a decrease in Q and...
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