Which of the following explains why the aggregate demand curve is downward sloping? A) the open economy effect B) the real-balance effect C) the interest rate effect D) all of the above ANSWER D
Date: September 2nd, 2020
According to the above table, if real Gross Domestic Product (GDP) equals $30,000, what is the average propensity to consume? A) 0.75 B) 0.67 C) 0.8 D) 0.87 ANSWER D
Date: September 2nd, 2020
Which of the following statements is true? A) A budget constraint is the same for a consumer at all levels of income. B) A budget constraint is a function of the income of the consumer and not the prices of the goods and services available for consumption. C) A budget constraint quantifies the trade-offs that […]
Date: September 2nd, 2020
Fiscal policy includes all of the following EXCEPT A) policies that influence the rate of growth of the quantity of money in circulation. B) changing taxes. C) changing government spending. D) policies that influence aggregate demand. ANSWER A
Date: September 2nd, 2020
Why is there NO persistent unemployment in the classical model? A) Unionization creates job security for workers. B) The wage level adjusts to eliminate unemployment. C) The interest rate adjusts to eliminate unemployment. D) The rate of economic growth is always high enough to allow those who want to work at current wages to find […]
Date: September 2nd, 2020
Suppose that along the aggregate demand curve, real GDP equals $14.2 trillion when the GDP deflator is 90. If the GDP deflator were 95, real GDP along the aggregate demand curve would equal A) more than $14.2 trillion but less than $14.8 trillion. B) less than $14.2 trillion. C) $14.2 trillion. D) more than $14.8 […]
Date: September 2nd, 2020
Other things being equal, along an aggregate demand curve, a higher price level is associated with A) a lower nominal GDP. B) a higher real GDP. C) higher income levels. D) a lower real GDP. ANSWER D
Date: September 2nd, 2020
If the economy is operating on the long-run aggregate supply curve, then expansionary fiscal policy will A) generate higher prices in the short run, but will induce aggregate supply to increase in the long run. B) generate an increase in real GDP and higher prices in the short run, but then real GDP will decrease […]
Date: September 2nd, 2020
Which of the following is NOT an assumption of the classical system? A) Wages and prices are inflexible. B) Pure competition exists. C) There is no money illusion. D) People are motivated by self interest. ANSWER A
Date: September 2nd, 2020
The break-even point on the consumption function represents the point where A) consumption is zero. B) income equals consumption plus spending. C) consumption equals spending. D) consumption equals income. ANSWER D
Date: September 2nd, 2020
