If Canada imports products from the US & Canadian income falls, then the US PL and RGDP will:

PL will decrease; RGDP will decrease

An important assumption in Keynesian economics is:

P rigidity will cause ↓ AD to lead to an ↑ in unemployment

Answer above question

decrease spending/decrease/decrease

Which of the following would best explain a increase in full-employment (potential) RGDP?

an increase in investment and capital stock

What will be the impact on RGDP?

RGDP will decrease by a maximum of $80 million

answer above question

an increase in the PL and a decrease in the real wage

Stagflation might be cause by:

an increase in the price of raw materials

Suppose that the unemployment rate falls from 6% to 4%. An explanation might be that:

the aggregate supply curve shifted to the right

Which of the following will most likely lead to an increase in inflationary expectations?

An increase in the money supply

If the economy is currently at E1, which of the following will most likely occur in the LR

AS will shift left as wages increase

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Gruver Unit 3 Review

20 termsStudBud Administration66 plays

Review concepts of AD/AS, Inflationary Gap, Recessionary Gap, Phillips Curve, MPC, Mulitplier, Fiscal Policy

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Questions 20

Answers

1
In SR, if RGDP = RGDPf & a "-" supply shock occurs, all of the following will occur except
stagflation
a decrease in aggregate demand
a decrease in RGDP
an increase in the price level
2
In the short run a decrease in wages and production costs will most likely cause:
PL decrease; RGDP decrease
PL decrease; RGDP increase
PL increase; RGDP increase
PL increase; RGDP decrease
3
If an increase in G of $100 billion increases RGDP by $500 billion, then the is MPC =
.9
.8
.5
.2
4
If Canada imports products from the US & Canadian income falls, then the US PL and RGDP will:
PL will decrease; RGDP will decrease
PL will increase; RGDP will increase
PL will increase; RGDP will increase
PL will increase; RGDP will decrease
5
An important assumption in Keynesian economics is:
when interest rates are high, gov't needs more $
P rigidity will cause ↓ AD to lead to an ↑ in unemployment
price flexibility will allow the economy to self-correct
when AD is too low, prices will fall
6
Dissaving occurs when disposable income is:
$500
$540
$525
$555
7
Answer above question
decrease spending/decrease/decrease
increase spending/decrease/increase
decrease spending/increase/increase
increase taxes/increase/decrease
8
According to the short run Phillips curve, an increase in inflation will be associated with:
a recession
an increase in interest rates
an increase in the SRAS curve
a decrease in unemployment
9
An decrease in which of the following will increase aggregate demand
real interest rates
consumer wealth
net exports
government spending
10
Which of the following would best explain a increase in full-employment (potential) RGDP?
an increase in investment and capital stock
no cyclical unemployment
a higher price level
a major epidemic kills a large portion of the population
11
What will be the impact on RGDP?
RGDP will decrease by a maximum of $100 million
RGDP will increase by a maximum of $100 million
RGDP will increase by a maximum 0f $80 million
RGDP will decrease by a maximum of $80 million
12
An increase in consumer spending will cause the PL and RGDP to
PL increase; RGDP decrease
PL decrease: RGDP decrease
PL increase; RGDP no change
PL increase; RGDP increase
13
The marginal propensity to save for this economy is:
4
2.5
0.4
0.6
14
Read above question
decrease by up to $200
increase by up to $200
decrease by up to $800
increase by up to $800
15
answer above question
a decease in the PL and an increase in the nominal wage
an increase in the PL and a decrease in the real wage
an increase in the PL and an increase in the nominal wage
a decrease in the PL and a decrease in the nominal wage
16
Stagflation might be cause by:
an increase in technology
a decease in the price of raw materials
an increase in the money supply
an increase in the price of raw materials
17
Suppose that the unemployment rate falls from 6% to 4%. An explanation might be that:
the aggregate supply curve shifted to the right
the AD curve shifted to the left
the LRAS shifted to the left
there was an increase in the interest rate
18
Which of the following will most likely lead to an increase in inflationary expectations?
An decrease in the government budget deficit
An increase in the marginal propensity to save
An increase in the money supply
A decrease in the prices of raw materials
19
If the economy is currently at E1, which of the following will most likely occur in the LR
AD will shift left as consumer spending ↓ due to inflation
AS will shift left since workers will be laid off
LRAS will shift right resulting in economic growth
AS will shift left as wages increase
20
A negative supply shock will most likely lead to:
an increase in employment
a decrease in AD
a decrease in national income
a decrease in PL

Gruver Unit 3 Review Flashcards | StudBud