If the price of inputs rises and personal income taxes rise:
a. Aggregate demand rises, and aggregate supply falls.
b. Aggregate demand rises, but aggregate supply does not change.
c. Aggregate demand falls, and aggregate supply rises.
d. Aggregate demand and aggregate supply rise.
e. Aggregate demand and aggregate supply fall.
Question 2 - Assume that business investment spending rises, and the increase is funded by greater borrowing in the capital markets. If the nation has low mobility international capital markets and a fixed exchange rate system, what happens to the real GDP and the nominal value of the domestic currency in the context of the Three-Sector-Model?
a. Real GDP rises and nominal value of the domestic currency falls.
b. Real GDP falls and nominal value of the domestic currency remains the same.
c. Real GDP rises and nominal value of the domestic currency remains the same.
d. Real GDP rises and nominal value of the domestic currency rises.
e. There is not enough information to determine what happens to these two macroeconomic variables.
Question 3 - If there is an improvement in technology that affects only Aggregate Supply and a nation's wealth falls due to sagging stock market, then:
a. Aggregate demand rises, and aggregate supply falls.
b. Aggregate demand and aggregate supply rise.
c. Aggregate demand and aggregate supply fall.
d. Neither aggregate demand nor aggregate supply change.
e. Aggregate demand falls, and aggregate supply rises.
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