Module 7 Quiz

A  import spending

B  government spending

C  consumption

A  C + I + G + import spending.

B  C + I + G + (X-M).

C  C + I + G + gross exports.

A  flattens

B  does not affect

C  steepens

A  people would get things on sale

B  people still have basics needs they must meet

C  people always make a basic income no matter what

A  real spending

B  real savings

C  real interest rates

A  The budget process is what is used by the federal, state and local governments determine the level of government spending

B  On a Keynesian cross diagram the government spending appears as a horizontal line.

C  There is fluctuation in government spending.

A  The investment function on a graph is drawn as a horizontal line.

B  There is a relationship between the investment function and the GDP.

C  The investment function has a slope of one.

A  The graph would include the consumption function (after taxes) the government spending function, and the net export function.

B  The graph would include the consumption function (after taxes), the investment function, and the government spending function.

C  The graph would include the consumption function (after taxes), the investment function, the government spending function, and the net export function.

A  spending model

B  income-expenditure model

C  consumption function

A  play a role; the aggregate demand has a significant gap with the aggregate supply

B  not play a role; actions by consumers, firms, and trading partners fall short of expectations

C  play a role; there is inflation and unemployment

A  should not; when there is unemployment and inflation

B  should; when the aggregate demand does not match the aggregate supply

C  should not; especially when actions by consumers, firms, and trading partners fall short of expectations

A  The Keynesian Phillips curve tradeoff.

B  A Keynesian cross diagram.

C  A neoclassical aggregate demand-aggregate supply model.

A  shift to the left

B  shift to the right

C  remain the same.

A  The AD curve would shift to the left.

B  The AD curve would remain unchanged.

C  The AD curve would shift to the right.

A  The larger macroeconomy tends to adjust slowly to shifts in aggregate demand because of sticky prices.

B  Over the long-term, the aggregate supply curve shifts.

C  Businesses operate at full employment when aggregate demand is high enough to motivate them to hire more labor.

A  their wealth

B  past profits

C  interest rates

A  all complementary elements of a market economy

B  all components of aggregate demand.

C  some of the opposing elements found in a market economy.

A  decrease in government spending to match declining tax revenues

B  increase in home purchases, as expected future incomes increased

C  decrease in consumption expenditure, as household wealth declined.

A  Prices are sticky.

B  It is aggregate supply that is the primary determinant of economic output..

C  Macroeconomics must focus on growth in the long-term.