Assume that fewer businesses offer new bonds to raise investment funds when government borrowing ...

Assume that fewer businesses offer new bonds to raise investment funds when government borrowing increases interest rates. This would be an example of:
 a. Ricardian equivalence.
  b. overestimating the tax multiplier.
  c. crowding out.
  d. increased consumption.
  e. the balanced-budget multiplier.

Question 2

Which of the following would shift the supply curve for gasoline to the right?
 a. an increase in the demand for gasoline.
 b. an increase in the price of gasoline.
 c. an increase in the number of producers of gasoline.
 d. an increase in the price of oil, an input into the production of gasoline.

Question 3

Cost-push inflation is caused by:
 a. an increase in short-run aggregate supply.
  b. a decrease in short-run aggregate supply.
  c. an increase in long-run aggregate supply.
  d. a decrease in long-run aggregate supply.

Question 4

In the presence of the crowding out effect, the purchase of Treasury bonds by the government will result in:
 a. an increase in the interest rates.
  b. a decrease in the price of bonds.
  c. a decline in the private sector spending.
  d. an increase in the private sector spending.
  e. a decrease in the rate of inflation.

Question 5

A decrease in the number of sellers in the market causes
 a. the supply curve to shift to the left.
 b. the supply curve to shift to the right.
 c. a movement up and to the right along a stationary supply curve.
 d. a movement downward and to the left along a stationary supply curve.

Question 6

Cost-push inflation is caused by:
 a. an increase in aggregate demand.
 b. a decrease in aggregate demand.
 c. an increase in short-run aggregate supply.
  d. a decrease in short-run aggregate supply.

Question 7

A drop in consumption or investment spending caused by increased government spending is referred to as:
 a. the multiplier effect.
  b. an expansionary gap.
  c. Ricardian equivalence.
  d. the paradox of thrift.
  e. crowding out.

Question 8

Dean bakes his famous apple pies and sells them at the local farmer's market. If the price of apples increases, the
 a. supply curve for Dean's pies will increase.
  b. supply curve for Dean's pies will decrease.
  c. demand curve for Dean's pies will increase.
  d. demand curve for Dean's pies will decrease.

Question 9

If there is currently a recessionary gap:
 a. The price level will tend to rise.
  b. Real output will tend to rise.
 c. Both a. and b. will occur.
 d. None of the above will occur.

Question 10

Suppose an economy is in equilibrium. Also suppose that consumer expectations change as the threat of war increases the likelihood of an increase in taxes. This would result in:
 a. an increase in equilibrium income.
  b. no change in equilibrium income.
  c. a downward shift of the aggregate supply curve.
  d. a decrease in equilibrium income.
  e. a change in the slope of the aggregate supply curve.

Question 11

Which of the following scenarios would prompt producers to supply less now than they otherwise would have?
 a. Producers expecting a higher price in the future
  b. Producers expecting prices to remain unchanged
  c. Producers expecting a lower price in the future
  d. Producers expecting prices to be volatile