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Homework answers / question archive / Rio Salado Community College ECN 211 - Lesson 7 Quiz Question1)Which of the following will occur when an economy's price level increases?   Aggregate demand will increase

Rio Salado Community College ECN 211 - Lesson 7 Quiz Question1)Which of the following will occur when an economy's price level increases?   Aggregate demand will increase

Economics

Rio Salado Community College

ECN 211 - Lesson 7 Quiz

Question1)Which of the following will occur when an economy's price level increases?

 

  • Aggregate demand will increase.
  • The purchasing power of money will increase.
  • The purchasing power of money will decrease.
  • The real value of wealth will increase. 1 out of 1

 

 

Question 2

 

If you have $5000 and the GDP deflator decreases from 100 to 80,

 

  • the $5000 will buy 20 percent less of the goods and services produced by society.
  • the $5000 will buy 20 percent more of the goods and services

produced by society.

  • the value of the $5000 decreases.
  • the value of the $5000 remains constant. 1 out of 1

 

 

Question 3

 

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

 

  • less than $14.2 trillion.

 

  • $14.2 trillion.
  • more than $14.2 trillion but less than $14.8 trillion.
  • more than $14.8 trillion. 1 out of 1

 

 

Question 4

 

The interest rate effect operates through

 

  • credit markets by changing borrowing costs.
  • the purchasing power of individuals' checking accounts.
  • government spending levels.
  • labor supply.

 

Question 5

 

If the price level increases,

 

  • the buying power of your checking account falls.
  • the buying power of your checking accounts rises with it.
  • there is no effect on buying power.
  • the economy tends to grow faster. 1 out of 1

 

 

Question 6

 

When the production possibilities curve shifts outward,

 

  • the long-run aggregate supply curve shifts to the left.
  • the long-run aggregate supply curve is unchanged.

 

  • the price level rises in the long run.
  • the long-run aggregate supply curve shifts to the right.

 

 

Question 7

 

Over the past several decades, what has been true about inflation in the United States?

 

  • Inflation rates have been consistently negative.
  • The nation has experienced persistent deflation.
  • Inflation has been very stable.
  • Inflation rates have been consistently positive.

 

 

Question 8

 

If long-run economic growth is not accompanied by a change in aggregate demand, the result will be

 

  • persistent inflation.
  • secular deflation.
  • devaluation of the dollar.
  • appreciation of the dollar.

 

 

Question 9

 

One tenet of classical economics is that

 

  • the role of the government should be limited, since the market will always be self-correcting.
  • the government should intervene whenever necessary to avoid any

unemployment.

  • wages and prices are "sticky downward."
  • the government should set a minimum wage slightly above the natural market equilibrium rate.

 

 

Question 10

 

All of the following will shift the short-run aggregate supply (SRAS) curve EXCEPT

 

  • a change in the price level.
  • a change in the price of labor.
  • a change in the price of a needed raw material.
  • technological progress. 1 out of 1

 

 

Question 11

 

In the classical model,

 

  • a decrease in aggregate demand will lead to a decrease in the price level and a decrease in real GDP.
  • changes in aggregate supply leave real GDP unchanged.
  • a decrease in aggregate demand will lead to an increase in the price level and a decrease in real GDP.
  • changes in aggregate demand affect only the price level, not

real GDP.

 

 

 

Question 12

 

The short-run aggregate supply curve is horizontal if

 

  • resources were fully utilized.
  • there are unutilized resources in the economy.
  • resources are perfectly adaptable between production processes.
  • there are high inflation rates. 1 out of 1

 

 

Question 13

 

The equilibrating force in the credit market in the classical model is

 

  • the interest rate.
  • the price level.
  • full employment.
  • fiscal policy.

 

Question 14

 

The Keynesian model is basically

 

  • a long-run theory.
  • a short-run theory.
  • a combination of long- and short-run theories.
  • a theory about the economy in both the long run and the short run. 1 out of 1

 

 

 

Question 15

 

In the classical model, how do shifts in aggregate demand affect real GDP?

 

  • Real GDP will remain unchanged.
  • Increases in aggregate demand increase real GDP.
  • Increases in aggregate demand decrease real GDP.
  • Decreases in aggregate demand increase real GDP. 1 out of 1

 

 

Question 16

 

Which of the following decreases aggregate supply?

 

  • discoveries of new raw materials
  • an increase in competition
  • an increase in training and education
  • a decrease in labor supply

 

 

Question 17

 

When you purchase Gap clothing and baseball tickets,

 

  • you are buying consumption goods.
  • you are buying capital goods.
  • you are consuming intermediate goods.
  • you are buying physical capital. 1 out of 1

 

 

 

Question 18

 

Suppose that there is no government and no international trade. When C+ I is less than the level of real GDP,

 

  • unplanned inventories decrease, and real GDP expands.
  • unplanned inventories increase, and real GDP contracts.
  • unplanned inventories equal zero, and there is no change in the level of real GDP.
  • real planned investment spending equals real planned saving.

 

 

Question 19

 

The multiplier helps explain

 

  • why a rise in government expenditures causes real Gross Domestic Product (GDP) to rise by more than the amount of the increase in government spending.
  • why an increase in disposable income causes real Gross Domestic

Product (GDP) to rise by less than the amount of the increase in disposable income.

  • why a decrease in taxes causes real Gross Domestic Product (GDP) to fall by more than the amount of the decrease in taxes.
  • why a fall in investment cause real Gross Domestic Product (GDP)

to rise by more than the amount of the decrease in investment.

 

 

Question 20

 

When the economy is operating at the equilibrium level of GDP, we know that

 

  • total planned real consumption expenditures equal real GDP.
  • planned real investment spending equals real net exports of zero.
  • total planned real expenditures equal real GDP.
  • real net exports equal inventory changes. 1 out of 1

 

 

Question 21

 

Your real disposable income is your real income after you have paid

 

  • rent and food expenses.
  • net taxes.
  • medical expenses.
  • consumption expenses.

 

 

Question 22

 

Consider a closed economy without a government and without international trade. What will be TRUE when this economy is in equilibrium?

 

  • Total planned real investment spending will exceed total planned real expenditures.
  • Planned real investment spending will exceed real planned saving.
  • Planned real consumption spending equals real GDP.
  • Planned real consumption spending plus planned real investment spending equals real GDP.

 

 

 

 

Question 23

The marginal propensity to consume is

 

  • real consumption/real disposable income.
  • real saving/real disposable income.
  • change in real consumption/change in real disposable income.
  • change in real saving/change in real disposable income. 1 out of 1

 

 

Question 24

 

Ignoring the government and foreign sectors, if planned investment spending is $500 billion, planned saving is $800 billion, and real Gross Domestic Product (GDP) is $13 trillion, then unplanned inventories will

 

  • decrease $300 billion.
  • increase $300 billion.
  • increase $800 billion.
  • not change.

 

Question 25

 

Government purchases

 

  • are determined by the public.
  • are determined by the political process.
  • are influenced by interest rates.
  • are determined by suppliers.

 

 

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