Economics homework help
Mana Komai Molle
Assignment 2
- Which of the following provides a correct definition of aggregate demand?
- Aggregate demand is the quantity of domestic product that is supplied at each possible income level, ceteris paribus.
- Aggregate demand is the quantity of domestic product that is demanded at each possible price level.
- Aggregate demand is the quantity of domestic product that is demanded at each possible price level, ceteris paribus.
- Aggregate demand is the quantity of domestic product that is demanded by the rest of the world, ceteris paribus.
- Which of the following provides a correct definition of aggregate supply?
- Aggregate supply is the quantity of domestic product that is supplied at each possible income level, ceteris paribus.
- Aggregate supply is the quantity of domestic product that is supplied at each possible price level, ceteris paribus.
- Aggregate supply is the quantity of domestic product that is supplied at each possible price level.
- Aggregate supply is the quantity of domestic product that is demanded by the rest of the world, ceteris paribus.
- Independent consumption
- Represents a component of consumption that is independent of supply.
- Decreases when consumer wealth goes down.
- Decreases when consumer wealth goes up.
- Decreases when real interest rate goes up.
- b and d.
- An increase in the general price level
- Decreases consumption by decreasing consumer wealth.
- Decreases net exports.
- Shifts the expenditure line downward.
- All of the above.
- a and b.
- Theoretically, a lower level of interest rate
- Encourages consumption.
- Discourages investment.
- Lowers the demand side equilibrium GDP.
- a and c.
- b and c.
- Which of the following shifts the investment curve downward?
- An increase in national income.
- An increase in the rate of inflation.
- An increase in capital gains taxes.
- None of the above.
- Which of the following statements best represent the definition of the demand side equilibrium GDP?
- The demand side equilibrium GDP is the level of GDP at which there is no recession.
- The demand side equilibrium GDP is the level of GDP at which aggregate demand equals the expenditures.
- The demand side equilibrium GDP is the level of GDP at which firms have no incentive to increase or decrease their total product.
- c and b.
- If the GDP of the economy is lower than the equilibrium GDP,
- Inventories would fall below the desired level and thus firms increase their production.
- Inventories would be above the desired level and thus firms increase their production.
- Inventories would fall below the desired level and thus firms decrease their production.
- Inventories would be above the desired level and thus firms decrease their production.
- A recessionary gap gets worse when
- a) Government reduces its expenditures.
- b) Government increases net taxes.
- c) Government increases its expenditures.
- d) Both a and b.
- Which of the following cause(s) a decrease in the demand side equilibrium GDP?
- A stronger home currency.
- An increase in the real interest rate.
- a and c
- All of the above.
- A decrease in the real interest rate.
- Increases the demand side equilibrium GDP.
- Decreases the demand side equilibrium GDP.
- Causes a movement along the aggregate demand.
- Both b and c.
- Both a and c.
- The 45 degree line drawn to find the demand side equilibrium
- Shows all points at which the aggregate demand is equal to aggregate supply.
- Shows all points at which the general price level is equal to the total expenditures.
- Is below the expenditure line if the economy produces the equilibrium GDP.
- Is above the expenditure line if the economy produces less than the equilibrium GDP.
- None of the above.
- A decrease in net taxes
- Decreases the equilibrium output.
- Shifts the expenditure line upward.
- Shifts the aggregate demand to the right.
- Both b, c.
- a, and c.
- Which is more likely to happen as a result of a sudden reduction in aggregate demand?
- Recession only.
- Inflation only.
- The economy will be out of equilibrium.
- Which of the following is true?
- Marginal propensity to consume shows the change in consumption as a result of a change in disposable income.
- Disposable income is roughly national income minus net taxes.
- Disposable income is either saved or consumed.
- Both b and c.
- a, b, and c.
- Everything else constant, inflation
- Leads to an increase in a country’s net exports.
- Increases firms’ inventories below the desired level.
- Causes a movement along the aggregate demand curve, while shifting the expenditure line downward.
- a and c.
- All of the above.
- Everything else constant, when a country’s money appreciates in value
- Its net exports tend to decrease.
- The demand side equilibrium GDP increases.
- The demand side equilibrium GDP decreases.
- a and c.
- a and b.
- Which of the following are true?
- Our imports are relatively sensitive to our national income.
- Our exports fall when our national income rises.
- When our economy grows slower than the economies of our trading partners our net exports tends to decrease.
- a and c.
- b and c.
- Which of the following is true?
- The expenditure line shows the relationship between the total product and the general price level.
- The expenditure line has the same components as the aggregate demand.
- The expenditure line shows the relationship between the total product and the total spending.
- None of the above.
- Both b and c.
- A recessionary gap is a result of
- a) Government deficit.
- b) Inadequate aggregate demand.
- c) Too much expenditures.
- d) Both a and b.
- Which of the following shifts the investment curve downward?
- A decrease in disposable income.
- An increase in the value of our domestic currency.
- A decrease in the real interest rate.
- None of the above.
- Which of the following cause(s) an increase in the demand side equilibrium GDP?
- A stronger home currency.
- A weaker home currency.
- An increase in the real interest rate.
- a and c
- b and c.
- An inflationary gap is a result of
- a) Government deficit.
- b) Inadequate aggregate demand.
- c) Too much expenditures.
- d) Both a and b.
- Everything else constant, inflation
- Leads to an increase in a country’s exports.
- Leads to a reduction in a country’s imports.
- Increases the inventories above the desired level.
- b and c.
- Which is more likely to happen as a result of a sudden increase in aggregate demand?
- Recession only.
- Inflation only.
- The economy will be out of equilibrium.