An increase 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 2Given a constant GDP gap, the higher the spending multiplier, the smaller will be the recessionary gap.
a. True
b. False
Indicate whether the statement is true or false
Question 3All of the following would shift a product's demand curve except a(n):
a. increase in the price of the product.
b. decrease in consumer income.
c. increase in the price of a substitute.
d. increase in the price of a complement.
Question 4The SRAS is ____; the LRAS is ____.
a. upward sloping; upward sloping
b. upward sloping; vertical
c. vertical; upward sloping
d. vertical; vertical
Question 5If the MPS equals 0.25 and the MPI is 0.15, then an initial change in investment spending of 250 million will result in a total change in equilibrium real GDP of 625 million.
a. True
b. False
Indicate whether the statement is true or false
Question 6According to the income effect, an increase in the price of oranges will:
a. cause consumers to consume more apples because of greater savings on that good.
b. cause consumers to spend more on oranges because a higher price signals that oranges are better than apples.
c. cause consumers to replace some oranges with other fruit that is now relatively cheaper than oranges.
d. leave consumers with less real income to spend on all goods.
Question 7Which of the following is true of the long-run aggregate supply curve?
a. It is vertical.
b. The level of RGDP supplied does not change as the price level changes.
c. The level of RGDP supplied changes with the levels of capital, land, labor, and technology available to the economy.
d. all of the above
Question 8In general, autonomous spending increases have a lower multiplier effect on real GDP when the economy is open to international trade.
a. True
b. False
Indicate whether the statement is true or false
Question 9A demand curve shows the relationship between price and quantity demanded, other things remaining constant. The other things that remain constant include all of the following except the:
a. price of the product.
b. price of complementary products.
c. price of substitute products.
d. number of consumers in the demographic group purchasing the product.
Question 10The long-run aggregate supply relationship refers to:
a. a time period long enough for the prices of both outputs and inputs to adjust to changes in the economy.
b. any time period of more than a year.
c. a time period in which input prices can change, but output prices have not had time to adjust.
d. a time period in which output prices can change but input prices have not had time to adjust.
Question 11A marginal propensity to consume of 0.75 and a marginal propensity to import of 0.05 are associated with an open-economy spending multiplier of 3.33.
a. True
b. False
Indicate whether the statement is true or false
Question 12Based on widespread reaction to the threat of the H1N1 virus, the likely effect on the demand curve for hand sanitizers would be
a. a shift of the demand curve to the right.
b. a movement downward along the demand curve to the right.
c. a shift of the demand curve to the left.
d. a movement upward along the demand curve to the left.
Question 13The misperception effect explanation for an upward-sloping short-run aggregate supply curve is based on:
a. falling profit margins as the price level rises.
b. rising costs of production as the price level rises.
c. fixed wage labor contracts.
d. people mistaking changes in aggregate demand for changes in the demand for their goods relative to other goods and services.
Question 14The paradox of thrift explains that increased savings by households could actually lower savings for the economy as a whole.
a. True
b. False
Indicate whether the statement is true or false
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