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| 1 | |
The aggregate demand curve is downward sloping to the right because a lower price level: |
| | A) | increases exports and reduces imports |
| | B) | increases the supply of money, reducing the interest rate |
| | C) | increases consumer incomes |
| | D) | causes consumers to buy more lower-priced goods, substituting away from higher-priced goods |
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| 2 | |
An increase in the demand for money caused by an increase in the price level will: |
| | A) | increase the interest rate, reduce investment, and shift the aggregate demand curve to the left |
| | B) | increase the interest rate, reduce investment, and decrease the quantity of real output demanded |
| | C) | increase the interest rate, increase investment, and shift the aggregate supply curve to the right |
| | D) | reduce the interest rate, increase investment, and shift the aggregate demand curve to the right |
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| 3 | |
The initial impact of an increase in businesses taxes is: |
| | A) | a reduction in real output and a higher price level |
| | B) | a reduction in real output and a lower price level |
| | C) | a reduction in real output and either a higher or lower price level |
| | D) | an increase in real output and a lower price level |
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| 4 | |
Higher prices of imported resources will: |
| | A) | move the economy downward and to the right along the aggregate demand curve |
| | B) | make the aggregate demand curve steeper |
| | C) | shift the aggregate supply curve to the left |
| | D) | shift the aggregate demand curve to the left |
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| 5 | |
Answer the next question on the basis of the following aggregate demand and supply schedules for a hypothetical economy:
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Refer to the above data. The equilibrium price level and quantity of real domestic output, respectively, are: |
| | A) | 250 and $500 |
| | B) | 150 and $500 |
| | C) | 250 and $300 |
| | D) | 200 and $400 |
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| 6 | |
Answer the next question on the basis of the following aggregate demand and supply schedules for a hypothetical economy:
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Refer to the above data. Suppose the MPC is .75 and government spending increases by $50. The new equilibrium price level would be: |
| | A) | 300 |
| | B) | 250 |
| | C) | 200 |
| | D) | 150 |
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| 7 | |
Demand-pull inflation is associated with: |
| | A) | a movement upward and to the left along the aggregate demand curve |
| | B) | a leftward shift of the aggregate supply curve |
| | C) | a leftward shift of the aggregate demand curve |
| | D) | a rightward shift of the aggregate demand curve |
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| 8 | |
A reduction in aggregate demand is: |
| | A) | likely to cause a reduction in the price level |
| | B) | unlikely to cause a reduction in the price level because of the interest rate effect |
| | C) | unlikely to cause a reduction in the price level because of efficiency wages and menu costs |
| | D) | likely to cause a reduction in aggregate supply |
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| 9 | |
If the multiplier is 4, a $100 increase in net exports will: |
| | A) | shift the aggregate demand curve to the right by $400, increasing equilibrium real GDP by $400 |
| | B) | shift the aggregate demand curve to the right by $400, but increase equilibrium real GDP by less than $400 |
| | C) | shift the aggregate demand curve to the left by $400, reducing equilibrium real GDP by $400 |
| | D) | shift the aggregate supply curve to the right by $400, but increase equilibrium real GDP by less than $400 |
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| 10 | |
A reduction in consumer taxes shifts the aggregate demand curve to the right. |
| | A) | True |
| | B) | False |
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