If the stock market is rising, it will most likely cause which of the following?

aggregate demand to increase and shift right

If the MPC=.75, and government spending decreases by $30 billion, then...

GDP will decrease by $120 billion.

When SRAS decreases...

eq price level increases, eq real output decreases, unemployment increases

When SRAS increases...

eq.price level decreases, eq quantity increases, unemployment decreases

Full employment GDP=$4million, eq. GDP=$2million, MPC=.8, to restore full employment...

the govt could decrease taxes $500k.

Full employment GDP=$4million, eq. GDP=$2million, MPC=.8, to restore full employment...

the govt could increase spending by $400k.

Cost-push inflation occurs when...

Aggregate supply decreases and shifts to the left.

The MPC is equal to...

change in spending/change in disposable income.

Crowding out occurs when government deficit spending or expansionary fiscal policy...

raises real interest and decreases investment

Demand-pull inflation occurs when...

Aggregate demand increases and shifts to the right.

eq.price level increases, eq quantity increases, unemployment decreases

If input prices decrease, then which of the following will most likely occur?

aggregate supply will increase and shift right

eq price level decreases, eq real output decreases, unemployment increases

An decrease in government spending will cause which of the following to occur?

aggregate demand to decrease and shift left

If the MPC=.80 and taxes are increased by $40 billion, then...

GDP will decrease by $160 billion.

Expansionary fiscal policy or deficit spending causes...

loanable funds demand to incr., real interest to increase.

If wages and salaries increase then which of the following is most likely to occur?

aggregate supply will decrease and shift left

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Section 3 AP Macro Review

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Questions 29

Answers

1
If the stock market is rising, it will most likely cause which of the following?
aggregate demand to decrease and shift left
aggregate demand to increase and shift right
aggregate supply to decrease and shift left
aggregate supply to increase and shif right
2
If the MPC=.75, and government spending decreases by $30 billion, then...
GDP will increase by $30 billion.
GDP will decrease by $120 billion.
GDP will decrease by $30 billion.
GDP will increase by $120 billion.
3
When SRAS decreases...
eq.price level decreases, eq quantity increases, unemployment decreases
eq price level increases, eq real output decreases, unemployment increases
eq.price level increases, eq quantity increases, unemployment decreases
eq price level decreases, eq real output decreases, unemployment increases
4
If the MPC equals .90, then the tax multiplier equals...
-3
-2
-9
-4
5
When SRAS increases...
eq.price level increases, eq quantity increases, unemployment decreases
eq.price level decreases, eq quantity increases, unemployment decreases
eq price level decreases, eq real output decreases, unemployment increases
eq price level increases, eq real output decreases, unemployment increases
6
Contractionary fiscal policy will have what effect on the price of previously issued b onds?
increase them
decrease them
no effect
gag reflex
7
If the MPC equals .75 then the tax multiplier equals...
-3
-9
-2
-4
8
The multiplier is equal to...
1/(1-MPS)
1/MPC
1/(1-MPC)
MPS/MPC
9
Full employment GDP=$4million, eq. GDP=$2million, MPC=.8, to restore full employment...
the govt could increase taxes $400k.
the govt could decrease taxes $500k.
the govt could decrease taxes $400k.
the govt could increase taxes $500k.
10
Full employment GDP=$4million, eq. GDP=$2million, MPC=.8, to restore full employment...
the govt could decrease taxes by $400k.
the govt could increase spending $2 million.
the govt could increase spending by $500k.
the govt could increase spending by $400k.
11
Cost-push inflation occurs when...
Aggregate demand decreases and shifts to the left.
Aggregate demand increases and shifts to the right.
Aggregate supply increases and shifts to the right.
Aggregate supply decreases and shifts to the left.
12
If the size of the MPS in increasing it will...
make the multiplier smaller
cause the MPC to increase
make the multiplier larger
not effect the multiplier
13
The MPC is equal to...
consumer spending as a function of agg. disposable income.
aggregate consumption/aggregate income.
consumption/income
change in spending/change in disposable income.
14
Crowding out occurs when government deficit spending or expansionary fiscal policy...
lowers real interest and decreases investment
lowers real interest and decreases investment
raises real interest and decreases investment
raises real interest and increases investment
15
If the MPC equals .8, then the tax multiplier equals...
-2
-3
-4
-9
16
Demand-pull inflation occurs when...
Aggregate supply decreases and shifts to the left.
Aggregate demand decreases and shifts to the left.
Aggregate supply increases and shifts to the right.
Aggregate demand increases and shifts to the right.
17
If the MPC equals .90, then the spending multiplier equals...
4
3
5
10
18
Current output is $10 mill, and potential output is $11 mill, and mpc= .8 then...
increase govt spending by $250k.
increase spending by $200k
decrease taxes by $200k
increase govt spending by $1 million
19
When AD increases...
eq.price level increases, eq quantity increases, unemployment decreases
eq price level increases, eq real output decreases, unemployment increases
eq price level decreases, eq real output decreases, unemployment increases
eq.price level decreases, eq quantity increases, unemployment decreases
20
If the MPC equals .75, then the spending multiplier equals...
5
3
10
4
21
If input prices decrease, then which of the following will most likely occur?
aggregate supply will increase and shift right
aggregate supply will decrease and shift left
aggregate demand will increase and shift right
aggregate demand will decrease and shift left
22
If the MPC equals .8, then the spending multiplier equals...
5
3
10
4
23
If congress increases government spending and lowers taxes, which of the following will occur?
real interest rates will fall
the demand for loanable funds will decrease
the supply of loanable funds will increase
real interest rates will rise
24
When AD decreases...
eq price level decreases, eq real output decreases, unemployment increases
eq price level increases, eq real output decreases, unemployment increases
eq.price level decreases, eq quantity increases, unemployment decreases
eq.price level increases, eq quantity increases, unemployment decreases
25
An decrease in government spending will cause which of the following to occur?
aggregate supply to increase and shift right
aggregate demand to decrease and shift left
aggregate demand to increase and shift right
aggregate supply to decrease and shift left
26
Expansionary fiscal policy will have what effect on the price of previously issued bonds?
decrease them
the butterfly effect
No effect
increase them
27
If the MPC=.80 and taxes are increased by $40 billion, then...
GDP decrease by $200 billion.
GDP will increase by $160 billion.
GDP will decrease by $160 billion.
GDP will increase by $200 billion.
28
Expansionary fiscal policy or deficit spending causes...
loanable funds demand to incr., real interest to increase.
loanable funds supply to decr., real interest to decrease.
loanable funds supply to incr., real interest to decrease.
loanable funds demand to decr, real interest to increase.
29
If wages and salaries increase then which of the following is most likely to occur?
aggregate demand will increase and shift right
aggregate demand will decrease and shift left
aggregate supply will decrease and shift left
aggregate supply will increase and shift right

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