To find the market demand curve for a product, we sum the individual demand curves
a. vertically.
b. diagonally.
c. horizontally.
d. perpendicularly.
Question 2Which of the following decreases U.S. aggregate demand?
a. a lower price level, increasing citizen's real wealth
b. a lower price level, reducing interest rates
c. a lower price level, increasing exports and decreasing imports
d. None of the above decrease U.S. aggregate demand.
Question 3If an economy consumes 75 percent of any increase in real GDP and spends 10 percent of this increased income on imports, then a decline in government spending by 60 million will result in a total reduction in equilibrium income of:
a. 171.43 million.
b. 123.47 million.
c. 151.63 million.
d. 73.47 million.
e. 71.43 million.
Question 4A downward-sloping demand curve illustrates
a. that demand increases.
b. that prices fall.
c. the relationship between income and demand.
d. the law of demand.
Question 5Which of the following increases U.S. aggregate demand?
a. a lower price level, increasing citizen's real wealth
b. a lower price level, reducing interest rates
c. a lower price level, increasing exports and decreasing imports
d. None of the above
Question 6In a closed economy that does not have international trade, the spending multiplier equals _____.
a. 1/MPS
b. 1/MPC
c. 1/(MPC-1)
d. 1/(1-MPS)
e. 1/(1+MPS)
Question 7Which of these statements best represents the law of demand?
a. When buyers' tastes for a good increase, they buy more of the good.
b. When the size of the consumer population rises, buyers purchase more of most goods.
c. When the price of a good decreases, buyers purchase more of the good.
d. Changes in preferences lead to changes in demand.
Question 8Which of the following increases U.S. aggregate demand?
a. a lower price level, increasing citizen's real wealth
b. a lower price level, reducing interest rates
c. a lower price level, increasing exports and decreasing imports
d. an increase in Americans' expected future incomes
Question 9In an economy that has no foreign trade, if real GDP declines by 160 million following a decline in investment spending of 40 million, then the marginal propensity to consume must be equal to _____.
a. 2
b. 0.33
c. 4
d. 0.75
e. 0.4
Question 10The law of demand states that, ceteris paribus, an increase in
a. price causes quantity demanded to increase.
b. price causes quantity demanded to decrease.
c. quantity demanded causes price to increase.
d. quantity demanded causes price to decrease.
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