The higher the level of inflation, the stronger the impact of reductions in the personal income tax on real GDP .
a. True
b. False
Indicate whether the statement is true or false
Question 2Which of the following is most likely to be an inferior good?
a. Porsches.
b. Lobster.
c. Used clothing.
d. An Ivy League education.
Question 3Keynes believed that the economy could stay in period of unemployment for a long time period without self-correcting.
a. True
b. False
Indicate whether the statement is true or false
Question 4The flatter the aggregate supply curve, the less the amount of government spending necessary to close a 1 billion GDP gap.
a. True
b. False
Indicate whether the statement is true or false
Question 5Which of the following is expected to happen if import restrictions are removed for a particular industry?
a. Supply will increase
b. Supply curve will shift to the left
c. Demand curve will shift to the left
d. Prices will increase
Question 6The concept of cost-push inflation cannot be explained by the aggregate expenditure model.
a. True
b. False
Indicate whether the statement is true or false
Question 7A decrease in federal income tax rates is an example of fiscal policy that affects GDP through consumption adjustments.
a. True
b. False
Indicate whether the statement is true or false
Question 8The market supply schedule reflects the total quantity:
a. supplied at market price.
b. supplied by all of the producers at the equilibrium price.
c. supplied at each price by all of the producers.
d. the vertical summation of the supply curves for individual firms.
Question 9The Keynesian-cross model suggests that increased saving increases the economy's output.
a. True
b. False
Indicate whether the statement is true or false
Question 10Government expenditures on goods and services have an indirect impact on the aggregate demand, while taxes have a direct impact.
a. True
b. False
Indicate whether the statement is true or false
Question 11Buyers who were originally willing to buy 800 units of a good at 4 per unit are now willing to buy 1200 units at 4 per unit. That change would be described as:
a. an increase in demand.
b. a decrease in demand.
c. an increase in quantity demanded.
d. a decrease in quantity demanded.
Question 12The value of the expenditure multiplier depends on the marginal propensity to consume.
a. True
b. False
Indicate whether the statement is true or false
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