What role do imports play in aggregate demand? Under which conditions will changes in imports expand aggregate demand? Reduce aggregate demand?
Question 2_____ refers to the changes in government spending and taxation that are aimed at achieving a policy goal.
a. Discretionary monetary policy
b. Discretionary fiscal policy
c. Discretionary foreign trade policy
d. Discretionary exchange rate policy
e. Discretionary interest rate policy
Question 3If new manufacturers enter the computer industry, then (ceteris paribus):
a. some established manufacturers must exit the industry.
b. the equilibrium price of computers must rise.
c. the supply curve shifts to the right.
d. the supply curve shifts to the left.
Question 4Identify four changes in the economy that would cause the aggregate demand curve to decrease (shift to the left).
Question 5Discretionary fiscal policy is best defined as:
a. the deliberate change in tax laws and government spending to change equilibrium income.
b. the deliberate manipulation of the money supply to expand the economy.
c. the arbitrary fluctuation in tax laws and budget requirements.
d. the automatic change in certain fiscal instruments when real GDP changes.
e. the policy action taken by the Congress to reduce the federal budget deficit.
Question 6Antonio's makes the greatest pizza and delivers it hot to all the dorms around campus. Last week Antonio's supplier of pepperoni informed him of a 25 increase in price. Which variable determining the position of the supply curve has changed and what effect does it have on supply?
a. future expectations; supply decreases
b. future expectations; supply increases
c. input prices; supply decreases
d. input prices; supply increases
Question 7What happens to aggregate demand if the demand for consumption goods decreases? If the demand for investment goods increases?
Question 8Starting with a situation where there is a substantial budget deficit, when tax revenues grow faster than federal expenditures, the government will experience:
a. a balanced budget.
b. an increasing national debt.
c. a declining budget surplus.
d. a declining budget deficit.
e. an increasing budget deficit.
Question 9Steel producers offer to sell steel to U.S. auto producers at a much lower price than in the past. As a result one would expect:
a. no change in the supply of automobiles.
b. an increase in the demand for automobiles.
c. an increase in the supply of automobiles.
d. a decrease in the supply of automobiles.
Question 10The aggregate demand curve portrays the relationship between price level and real GDP. What are the three reasons this relationship is a negative or inverse relationship? Provide brief illustrations of each.
Question 11The ratio of U.S. government spending to GDP reached its peak during:
a. World War I.
b. World War II.
c. the Great Depression.
d. the real estate crisis.
e. the bursting of the stock market bubble.
Question 12Which of the following will cause a change in the supply of a product?
a. a change in the price of suppliers' inputs
b. a change in the price of alternative goods that could be produced with the same resources
c. a change in the expected future price of the product
d. all of the above
Question 13Describe the difference between a microeconomic demand curve and an aggregate demand curve.
Question 14Which of the following trends has been observed in federal revenues and expenditures over time?
a. Expenditures were lower than the revenues in the 1998-2001 period.
b. Expenditures were lower than the revenues in the 1930s.
c. Expenditures were higher than the revenues in the 1998-2001 period.
d. Expenditures were more or less equal to the revenues in the 1930s.
e. Expenditures were more or less equal to the revenues in the 1998-2001 period.
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