If product price increases, then:

If product price increases, then:
 a. MP will increase.
  b. MFC will increase.
  c. MRP will increase.
  d. MP will decrease.

QUESTION 2

Suppose government purchases increase by 100 million in an economy, which leads to total output increasing by 500 million. The size of the multiplier is _____.
 a. 400
  b. 5
 c. 500
  d. 0.5
 e. 50

QUESTION 3

The largest component of aggregate expenditure is _____.
 a. government purchases
  b. transfer payments
 c. imports
 d. consumption
 e. investment

QUESTION 4

An increase in demand for French fries will cause equilibrium wage rates:
 a. and quantities of potato workers hired to rise.
  b. and quantities of potato workers hired to fall.
  c. to rise and quantities of potato workers hired to fall.
  d. to fall and quantities of potato workers hired to rise.
  e. and quantities of potato workers hired to stay the same.

QUESTION 5

If fiscal policy is used to close an expansionary gap, the _____.
 a. short-run aggregate supply curve shifts leftward and the price level falls
 b. short-run aggregate supply curve shifts rightward and the price level increases
  c. short-run aggregate supply curve shifts rightward and the price level falls
 d. aggregate demand curve shifts leftward and the price level falls
 e. aggregate demand curve shifts rightward and the price level falls

QUESTION 6

If consumption = 5,000; investment = 800, government purchases = 700, exports = 30, imports = 60, and transfer payments = 340, then _____.
 a. GDP = 7,400
  b. GDP = 7,740
  c. GDP = 3,140
  d. GDP = 6,470
  e. GDP = 6,840

QUESTION 7

Featherbedding allows unions to increase wages by:
 a. limiting the supply of labor.
  b. increasing firms' demand for labor.
  c. forcing firms to accept higher-than-equilibrium wages.
  d. reducing labor share of payroll taxes.

QUESTION 8

When the government closes an expansionary gap with a change in government spending, the _____ in government spending leads to _____.
 a. decrease; a decrease in both real GDP and the price level
 b. decrease; a decrease in real GDP and an increase in the price level
  c. decrease; an increase in both real GDP and the price level
 d. decrease; an increase in real GDP and a decrease in the price level
  e. increase; a decrease in both real GDP and the price level