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- 1. Multiple ChoiceWhat does the vertical axis represent on the aggregate demand curve?Total InputTotal OutputPrice LevelBoth A&B
- 2. Multiple ChoiceWhich of the following is not a determinant of aggregate demand ?Change in Consumer SpendingChange in Political PartiesChange in Government SpendingChange in investment Spending
- 3. Multiple ChoiceThe foreign purchases effect suggests that a decrease in Canada's price level relative to other countries will:shift the aggregate demand curve leftward.shift the aggregate supply curve leftward.decrease Canada's exports and increase Canada's imports.increase Canada's exports and decrease Canada's imports.
- 4. Multiple ChoiceThe aggregate supply curve (short-run) slopes upward and to the right because:changes in wages and other resource prices completely offset changes in the price level.the price level is flexible upward but inflexible downward.supply creates its own demand.wages and other resource prices adjust only slowly to changes in the price level.
- 5. Multiple Choice
Refer to the above diagram. If the initial aggregate demand and supply curves are AD0 and AS0, the equilibrium price level and level of real domestic output will be:F and C, respectively.G and B, respectively.F and A, respectively.E and B, respectively. - 6. Multiple ChoiceThe intersection of the aggregate demand and aggregate supply curve occurs at the economy’s equilibrium level ofNominal investment and the interest rateGovernment taxes and employmentReal disposable income and unemploymentReal domestic output and the price level
- 7. Multiple ChoiceIf exports from the United States increased, what would most likely happen to real gross domestic product and price level?
Real GDP / Price Leveldecrease/decreaseincrease/increasedecrease/increaseincrease/no chanve - 8. Multiple ChoiceA major advantage of automatic stabilizers in fiscal policy is that theyreduce private debtgo into effect w/o passage of new legislationthey require a balanced budgetkeep unemployment at zero percent
- 9. Multiple ChoiceIf, at full employment, the government wants to increase its spending by $200 billion without increasing inflation in the short run, it must do which of the following?raise taxes by more than $200 billionraise taxes by less than $200lower taxes by $200 billiondecrease the budget deficit
- 10. Multiple ChoiceAccording to Keynesian analysis, if government expenditures and taxes are increased by the same amount, which of the following will occur?AS will decreaseAS will increaseAD will increaseunemployment will increase
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