Which of the following causes a negative demand shock?

Consumers are worried they will lose their jobs

Actual business spending (I) in any time period is equal to:

planned + unplanned investment spending

will eventually correct with a decline in the SRAS

Ceteris Paribus, given the same MPC and MPS, a tax cut

Will create less GDP than the same sized spending program

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Krugman 16-19

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AD and SRAS M16-M19 review

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Questions 14

Answers

1
A decrease in which of the following will cause the SRAS to shift to the left?
wages
commodity prices
productivity
the use of cost of living adjustments in labor contracts
2
But, according to Lord Keynes, in the long run....
Constant increases in Government spending is a good thing
we're all dead
It's all good
YOLO
3
If workers get a wage increase
SRAS rises
SRAS falls
AD falls
LRAS declines
4
Which of the following causes a negative demand shock?
Firms' animal spirits are revived
Consumers are worried they will lose their jobs
The Government decides to lower taxes
Producers believe prices for their input factors will rise
5
The slope of a family's consumption function is equal to the
the MPC
1/mps
the inflation rate
the real interest rate
6
Actual business spending (I) in any time period is equal to:
planned + unplanned investment spending
planned investment spending + change in inventory
unplanned spending + change in inventory
planned spending - change in inventory
7
When the stock market rises
AD shifts to the right
AD shifts to the left
SRAS shifts to the left
AD is not effected
8
If the real value of household assets rise (home, stock market holdings, etc) then
SRAS rises
AD decreases
AD increases
ANIMAL SPIRITS decline
9
What is the tax multiplier if the MPC is 80%?
5
2
3
4
10
What is the fiscal multiplier if the marginal propensity to consume (MPC) = 80%
5
4
2
3
11
Given a consumption function: C = 16K + .5(Yd) and disposable income is 20K, consumer spending=
26K
32K
20K
autonomous spending, a
12
A recessionary GAP
is solved when taxes are raised
can never be increased, in the long run
is where real GDP is greater than the FE level of GDP
will eventually correct with a decline in the SRAS
13
Which government policy would shift the AD curve to the left?
Gov spending rises
Gov spending stays the same
The tax rate is increased
Tax receipts rise
14
Ceteris Paribus, given the same MPC and MPS, a tax cut
Will create more GDP than the same sized spending program
Will create less GDP than the same sized spending program

Krugman 16-19 Flashcards | StudBud