Other things constant, an increase in the price of beef will:
a. encourage consumers to buy more beef.
b. discourage consumers from buying as much beef.
c. shift the demand curve for beef to the right.
d. shift the demand curve for beef to the left.
Question 2In the short run, an increase in the price level:
a. increases output prices relative to input prices.
b. increases the profit margins of many producers.
c. increases RGDP supplied.
d. all of the above
Question 3Suppose the multiplier effect for Japan is 0.8 for any 1 billion change in U.S. government purchases. Therefore, Japanese real GDP will rise by 8 billion when U.S. government spending rises by 10 billion.
a. True
b. False
Indicate whether the statement is true or false
Question 4If the price of tennis rackets were to increase, we would expect:
a. the demand for tennis balls to increase.
b. the demand for tennis balls to decrease.
c. the supply of tennis balls to increase, leading to a movement along the demand curve for tennis balls.
d. the supply of tennis balls to decrease.
Question 5Starting from long run equilibrium, in response to a decrease in AD:
a. The price level will increase more in the long run than in the short run.
b. The short run equilibrium level of real output will be greater in the long run than in the short run.
c. Neither the price level nor real output will change in the long run.
d. Both a. and b. are correct
Question 6Foreign repercussions of changes in domestic imports cause the true domestic spending multiplier to be less than 1/(MPS+MPI)
a. True
b. False
Indicate whether the statement is true or false
Question 7If muffins and bagels are substitutes, a higher price for bagels would result in a(n)
a. increase in the demand for bagels.
b. decrease in the demand for bagels.
c. increase in the demand for muffins.
d. decrease in the demand for muffins.
Question 8In response to an increase in AD:
a. The price level will increase more in the long run than in the short run.
b. Real output will increase more in the long run than in the short run.
c. Both the price level and real output will increase more in the long run than in the short run.
d. Neither the price level nor real output will change in the long run.
Question 9If the spending multiplier equals 6 and equilibrium real GDP is 32 billion below potential real GDP, then total planned expenditures need to decrease by approximately 5.33 billion to close the recessionary gap.
a. True
b. False
Indicate whether the statement is true or false
Question 10Two goods are substitutes when a decrease in the price of one good
a. decreases the demand for the other good.
b. decreases the quantity demanded of the other good.
c. increases the demand for the other good.
d. increases the quantity demanded of the other good.
Question 11A decrease in the price level will:
a. increase the quantity of RGDP supplied, but not increase short-run aggregate supply.
b. decrease the quantity of RGDP supplied, but not decrease short-run aggregate supply.
c. increase short-run aggregate supply.
d. decrease short-run aggregate supply.
Question 12The recessionary gap is given by the difference between potential GDP and real GDP.
a. True
b. False
Indicate whether the statement is true or false
Question 13Which of the following will not increase the demand for iced tea?
a. an increase in advertising that makes drinking iced tea more appealing
b. an increase in the price of iced coffee, a substitute product
c. an increase in the income of consumers (assume that iced tea is a normal good)
d. a decrease in the price of iced tea
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