Test 4

A  increase the price level by more than real output.

B  reduce the price level by more than real output.

C  increase real output by more than the price level.

D  reduce real output by more than the price level.

A  leftward shift of the aggregate demand curve and a leftward shift of the aggregate supply curve.

B  rightward shift of the aggregate supply curve along a fixed aggregate demand curve.

C  rightward shift of the aggregate demand curve and a rightward shift of the aggregate supply curve.

D  rightward shift of the aggregate demand curve along a fixed aggregate supply curve.

A  rightward shift of the AD curve.

B  leftward shift of the AD curve.

C  rightward shift of the AS curve.

D  leftward shift of the AS curve.

A  rightward shift of the AD curve along an upsloping AS curve.

B  rightward shift of the AD curve along a downsloping AS curve.

C  leftward shift of the AS curve along a downsloping AD curve.

D  leftward shift of the AS curve along an upsloping AD curve.

A  slopes downward and to the right.

B  is vertical.

C  is horizontal.

D  slopes upward and to the right.

A  real output per unit of input

B  the amount of capital goods used per worker.

C  the changes in real wealth caused by price level changes.

D  per-unit production costs.

A  Production bottlenecks occurring when producers near full plant capacity.

B  A reduction in business taxes.

C  An increase in the price of imported resources.

D  Deregulation of industry.

A  85

B  60

C  40

D  75

A  Increased consumer optimism regarding future economic conditions.

B  A reduced amount of excess capacity.

C  Increased government spending on military equipment.

D  An appreciation of the U.S. dollar.

A  An increase in personal income tax rates.

B  An increase in stock prices that increases consumer wealth.

C  A reduction in household borrowing because of tighter lending practices.

D  Increased fear that a recession will cause workers to lose their jobs.

A  A decline in the interest rate at each possible price level.

B  An increase in personal income tax rates.

C  A change in the price level.

D  Depreciation of the international value of the dollar.

A  explain why the aggregate demand curve is downsloping.

B  demonstrate why real output and the price level are inversely related.

C  include input prices and resource productivity.

D  explain shifts in the aggregate demand curve.

A  decrease both U.S. imports and U.S. exports.

B  increase U.S. imports and decrease U.S. exports.

C  increase the amount of U.S. real output purchased.

D  increase both U.S. imports and U.S. exports.

A  a lower price level will decrease the real value of many financial assets and therefore reduce spending.

B  a higher price level will decrease the real value of many financial assets and therefore reduce spending.

C  a higher price level will increase the real value of many financial assets and therefore increase spending.

D  an increase in the price level will increase the demand for money, increase interest rates, and reduce consumption and investment spending.

A  an increase in the price level will decrease the demand for money, reduce interest rates, and increase consumption and investment spending.

B  an increase in the price level will increase the demand for money, increase interest rates, and decrease consumption and investment spending.

C  an increase in the price level will increase the demand for money, reduce interest rates, and decrease consumption and investment spending.

D  a decrease in the supply of money will increase interest rates and reduce interest-sensitive consumption and investment spending.

A  downsloping because production costs decrease as real output rises.

B  horizontal when there is considerable unemployment in the economy.

C  downsloping because of the interest-rate, real-balances, and foreign purchases effects.

D  vertical under conditions of full employment.

A  stimulate real output and employment in the U.S. economy.

B  depress real output and employment in the U.S. economy.

C  cause inflation in the U.S. economy.

D  have no perceptible impact on the U.S. economy.

A  a country’s exports and imports to both fall

B  a country’s net exports to rise.

C  a country’s net exports to fall.

D  the multiplier to decrease.

A  exports.

B  investment.

C  saving.

D  consumption.

A  downward and decrease aggregate expenditures.

B  upward and increase aggregate expenditures.

C  upward and decrease aggregate expenditures.

D  downward and increase aggregate expenditures.

A  the business sector will lay off workers.

B  the price level will fall.

C  domestic output will increase.

D  the aggregate level of saving will decline.

A  does not respond to changes in interest rates.

B  does not change when real GDP changes.

C  automatically changes in response to changes in real GDP.

D  changes by less in percentage terms than changes in real GDP.

A  increased by 21 percent; fell to 2 percent

B  declined by 21 percent; rose to 27 percent

C  declined by 40 percent; rose to 50 percent

D  declined by 27 percent; rose to 25 percent

A  Prices are fully flexible.

B  Prices are fixed.

C  Government spending policy has no ability to affect the level of output.

D  The economy is at full employment.

A  Bank panic of 1907

B  Great Depression.

C  Economic expansion of the 1920s

D  Spectacular economic growth during World War II.

A  firms were optimistic about future sales.

B  the investment demand curve shifted inward.

C  the investment demand curve was positively sloped during this period.

D  purchases of capital from abroad increased, and these were not reflected in investment spending figures for that period.

A  change in GDP resulting from a change in spending.

B  full-employment unemployment rate

C  level of business inventories.

D  change in the rate of inflation from a change in the interest rate.

A  a decline in the MPC can cause GDP to rise by several times that amount.

B  consumption is typically several times as large as saving.

C  a change in consumption can cause a larger increase in investment.

D  an increase in investment can cause GDP to change by a larger amount.

A  expected profits are highly variable.

B  capital goods are durable, expected profits are highly variable, and innovation occurs at an irregular pace.

C  innovation occurs at an irregular pace.

D  capital goods are durable.

A  high nominal interest rate.

B  decrease in nominal wages.

C  low rate of growth of nominal GDP.

D  low nominal interest rate.

A  6 percent.

B  24 percent.

C  18 percent.

D  12 percent.

A  also called the after-tax interest rate.

B  the percentage increase in money that the lender receives on a loan.

C  usually higher than the nominal interest rate.

D  the percentage increase in purchasing power that the lender receives on a loan.

A  have no effect on the location of the investment-demand curve.

B  decrease the market price of real capital goods.

C  shift the investment-demand curve to the left.

D  shift the investment-demand curve to the right.

A  interest rate and the expected price level.

B  marginal propensity to consume and the real interest rate.

C  expected rate of return on capital goods and the real interest rate.

D  level of saving and the real interest rate.

A  increase the amount of investment spending.

B  shift the investment schedule downward.

C  shift the investment demand curve to the right.

D  shift the investment demand curve to the left.

A  80 percent.

B  8 percent.

C  2 percent.

D  20 percent.

A  the level of investment spending and real GDP..

B  the price level and the level of investment spending..

C  the real interest rate and the level of investment spending..

D  the nominal interest rate and the level of investment spending..

A  a movement down along a stable consumption function.

B  an upward shift of the consumption schedule.

C  a downshift of the saving schedule.

D  an upward shift of the saving schedule.

A  A currently small stock of durable goods in the possession of consumers.

B  The expectation of a future decline in the consumer price index.

C  A currently low level of household debt.

D  The expectation of future shortages of essential consumer goods.

A  wealth effect.

B  multiplier effect.

C  Keynes effect.

D  interest-rate effect.

A  10

B  9

C  1

D  mone of these

A  0.1

B  -0.9

C  1.1

D  1

A  saving is zero.

B  the APC is zero.

C  the MPC equals 1.

D  saving equals income.

A  saving exceeds consumption.

B  saving exceeds income.

C  consumption exceeds income.

D  income exceeds consumption.

A  A decrease in stock prices.

B  A decrease in disposable income.

C  An increase in stock prices.

D  An increase in consumer indebtedness.

A  1 divided by the slope of the savings schedule or line.

B  the slope of the consumption schedule or line.

C  1 divided by the slope of the consumption schedule or line.

D  the slope of the savings schedule or line.

A  income/consumption.

B  change in income/change in consumption.

C  consumption/income.

D  change in consumption/change in income.

A  that consumption depends primarily on the level of business investment.

B  that the MPC increases in proportion to GDP.

C  the amounts households intend to consume at various possible levels of aggregate income.

D  that households consume more when interest rates are low.

A  all the points where the MPC is constant.

B  all the points at which consumption and income are equal.

C  the amounts households will plan to save at each possible level of income.

D  all the points at which saving and income are equal.

A  consume is one-half.

B  consume is two-fifths.

C  save is three-fifths.

D  consume is three-fifths.

A  level of income.

B  price level.

C  level of bank credit.

D  interest rate.