THIS SHOWS THE ANSWERS I PICKED AND THE CORRECT ANSWER I MADE AN A.
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(JUNE-2013)
Question 1 .1 out of 1 points If the price level rises,Answer
Selected Answer: e. the aggregate expenditures line shifts downward; the economy moves upward along the aggregate demand curve
Correct Answer: e. the aggregate expenditures line shifts downward; the economy moves upward along the aggregate demand curve . Question 2 .1 out of 1 points If autonomous investment expenditures decline because of higher interest ratesAnswer
Selected Answer: d. aggregate demand increases
Correct Answer: d. aggregate demand increases . Question 3 .1 out of 1 points In an economy without a government and without international transactions, aggregate expenditure at each level of income is equal toAnswer
Selected Answer: c. consumption plus planned investment
Correct Answer: c. consumption plus planned investment . Question 4 .1 out of 1 points A decrease in the price level will have which of the following effects?Answer
Selected Answer: d.
There will be downward movement along a particular aggregate demand curve.
Correct Answer: d.
There will be downward movement along a particular aggregate demand curve. . Question 5 .1 out of 1 points If people spend 2/3 of any extra income they receive, new autonomous spending of $10 causes equilibrium to increase byAnswer
Selected Answer: a.
$30.00
Correct Answer: a.
$30.00
. Question 6 .1 out of 1 points If the marginal propensity to consume in your classmate's nation is 3/5 and the marginal propensity to save in your country is 1/10, which of the following must be true?Answer
Selected Answer: b.
The spending multiplier is smaller in your classmate's nation than in your country.
Correct Answer: b.
The spending multiplier is smaller in your classmate's nation than in your country. . Question 7 .1 out of 1 points Exhibit 10-2
(THIS WAS A TABLE IT DID NOT PASTE WELL)
(Trillions of Dollars)
Real
GDP
(Y)
Net
Taxes
(NT) Dispos
-able
Income
(Y-NT)
Con- sumption (C)
The marginal propensity to consume (MPC) in Exhibit 10-2 equalsAnswer
Selected Answer: d.
0.80 or 4/5
Correct Answer: d.
0.80 or 4/5
. Question 8 .1 out of 1 points Suppose that at a particular level of real GDP, the unintended change in inventories is zero. Which of the following is true?Answer
Selected Answer: c.
That level of real GDP is the equilibrium level of real GDP demanded.
Correct Answer: c.
That level of real GDP is the equilibrium level of real GDP demanded. . Question 9 .1 out of 1 points The aggregate demand curve slopes downward to the right, reflecting a relationship between the price level andAnswer
Selected Answer: b. real GDP
Correct Answer: b. real GDP . Question 10 .1 out of 1 points Suppose that planned investment increases by $200 billion and that the marginal propensity to consume equals 0.80. The aggregate expenditure line will shift upward by __________ at every level of real GDP.Answer
Selected Answer: e.
$200 billion
Correct Answer: e.
$200 billion . Question 11 .1 out of 1 points Which of the following would shift the LRAS curve to the left?Answer
Selected Answer: d. a civil war
Correct Answer: d. a civil war . Question 12 .1 out of 1 points As an expansionary gap is closed in the long run by firms' actions,Answer
Selected Answer: a. output decreases and the price level increases
Correct Answer: a. output decreases and the price level increases . Question 13 .1 out of 1 points Which of the following types of unemployment can exist in an economy that is at its potential output level?Answer
Selected Answer: b. frictional, seasonal, and structural unemployment only
Correct Answer: b. frictional, seasonal, and structural unemployment only . Question 14 .1 out of 1 points Which of the following is not assumed to be constant along a short-run aggregate supply curve?Answer
Selected Answer: a. the actual price level
Correct Answer: a. the actual price level . Question 15 .1 out of 1 points If the economy were at its potential output level, which of the following would not be true?Answer
Selected Answer: b.
Frictional unemployment would be zero.
Correct Answer: b.
Frictional unemployment would be zero. . Question 16 .1 out of 1 points If the actual price level exceeds the expected price level reflected in long-term contracts,Answer
Selected Answer: a. unemployment will decrease
Correct Answer: a. unemployment will decrease . Question 17 .1 out of 1 points Which of the following is true of the short-run aggregate supply curve?Answer
Selected Answer: d.
It shows the relation between the price level and the quantity of aggregate output firms supply, other things constant.
Correct Answer: d.
It shows the relation between the price level and the quantity of aggregate output firms supply, other things constant. . Question 18 .1 out of 1 points In the short run, but not in the long run,Answer
Selected Answer: c. cyclical unemployment can exist
Correct Answer: c. cyclical unemployment can exist . Question 19 .1 out of 1 points Exhibit 11-3
In Exhibit 11-3, the distance between Y1 and Y2 is calledAnswer
Selected Answer: e. an expansionary gap
Correct Answer: e. an expansionary gap . Question 20 .1 out of 1 points Which of the following is true of a contractionary gap?Answer
Selected Answer: a.
In the long run, this gap will close when resource suppliers negotiate lower resource payments.
Correct Answer: a.
In the long run, this gap will close when resource suppliers negotiate lower resource payments. . Question 21 .1 out of 1 points Fixed resource prices help explain why firmsAnswer
Selected Answer: c. increase output in the short run when the price level increases
Correct Answer: c. increase output in the short run when the price level increases . Question 22 .1 out of 1 points If the price level turns out to be lower than expected,Answer
Selected Answer: b. businesses cut back production
Correct Answer: b. businesses cut back production . Question 23 .1 out of 1 points The potential level of output can be altered by changes inAnswer
Selected Answer: b. a nation's stock of capital
Correct Answer: b. a nation's stock of capital . Question 24 .1 out of 1 points An expansionary gap is closed in the long run by a(n)Answer
Selected Answer: b. leftward shift of the short-run aggregate supply curve
Correct Answer: b. leftward shift of the short-run aggregate supply curve . Question 25 .1 out of 1 points The real wage represents theAnswer
Selected Answer: e. quantity of goods and services a worker can purchase in exchange for work time
Correct Answer: e. quantity of goods and services a worker can purchase in exchange for work time . Question 26 .1 out of 1 points An increase in the MPC will increase the simple tax multiplier but have no effect on the simple spending multiplier.Answer
Selected Answer: a.
False
Correct Answer: a.
False
. Question 27 .1 out of 1 points Suppose that the economy is experiencing an expansionary gap of $1,000 and the MPC equals 0.8. With an upward-sloping short-run aggregate supply curve, the government can close the gap if it decreases purchases byAnswer
Selected Answer: a. more than $200
Correct Answer: a. more than $200 . Question 28 .1 out of 1 points In which of the following ways does government affect the consumption component of planned aggregate expenditures?Answer
Selected Answer: d. through net taxes, which change disposable income
Correct Answer: d. through net taxes, which change disposable income . Question 29 .0 out of 1 points __________ unemployment benefits __________ the opportunity cost of not working, so some job seekers may decide to __________ their job searches.Answer
Selected Answer: d.
Lower, reduce, decrease
Correct Answer: a.
Higher, reduce, decrease . Question 30 .1 out of 1 points The introduction of a $100 autonomous net tax in an economy with an MPC equal to 0.7 will, at each level of real GDP,Answer
Selected Answer: d. decrease consumption by $70
Correct Answer: d. decrease consumption by $70 . Question 31 .1 out of 1 points If the MPC = 0.6 and government purchases increase by $2 trillion, then equilibrium real GDP demandedAnswer
Selected Answer: b. increases by $5 trillion
Correct Answer: b. increases by $5 trillion . Question 32 .1 out of 1 points If policy makers estimate the natural rate of unemployment incorrectly,Answer
Selected Answer: c. policies that appear to be successful in the short run will lead to further economic problems
Correct Answer: c. policies that appear to be successful in the short run will lead to further economic problems . Question 33 .1 out of 1 points If autonomous net taxes decline by $40 billion and the MPC = 0.75, then equilibrium real GDP demandedAnswer
Selected Answer: e. increases by $120 billion
Correct Answer: e. increases by $120 billion . Question 34 .1 out of 1 points Which of the following might be considered the most expansionary set of fiscal policies?Answer
Selected Answer: e. increase in government purchases, decrease in taxes, and increase in transfer payments
Correct Answer: e. increase in government purchases, decrease in taxes, and increase in transfer payments . Question 35 .1 out of 1 points During a recession, unemployment insurance ensures thatAnswer
Selected Answer: e the disposable income of those who are unemployed will increase above the usual level
Correct Answer: e. disposable income does not fall by as much as GDP decreases . Question 36 .1 out of 1 points If the MPC is 0.75, a decrease in net taxes of $100 billion will increase the equilibrium level of real GDP byAnswer
Selected Answer: a.
$300 billion
Correct Answer: a.
$300 billion . Question 37 .1 out of 1 points If policy makers think the natural rate of unemployment is lower than it really is, then their policies designed to move the economy to the estimated natural rate, if continued over the long run, willAnswer
Selected Answer: e.
Correct Answer: e cause continuing inflation . Question 38 .1 out of 1 points The U.S. federal income tax is progressive, which means thatAnswer
Selected Answer: d. high-income individuals are taxed at a higher rate than low-income individuals
Correct Answer: d. high-income individuals are taxed at a higher rate than low-income individuals . Question 39 .1 out of 1 points When the government closes an expansionary gap with a change in government spending, the __________ in government spending leads to __________.Answer
Selected Answer: a. decrease; a decrease in both real GDP and the price level
Correct Answer: a. decrease; a decrease in both real GDP and the price level . Question 40 .1 out of 1 points The effect of a change in net taxes on the quantity of real GDP demanded equals the resulting shift in the consumption function timesAnswer
Selected Answer: a. the simple spending multiplier
Correct Answer: a. the simple spending multiplier . Question 41 .1 out of 1 points The accepted philosophy on U.S. federal deficits prior to the Great Depression was thatAnswer
Selected Answer: d. the budget should be annually balanced
Correct Answer: d. the budget should be annually balanced . Question 42 .1 out of 1 points Which component of aggregate expenditure is most subject to crowding out?Answer
Selected Answer: d. investment spending
Correct Answer: d. investment spending . Question 43 .1 out of 1 points Which of the following is true of an increase in a federal government budget surplus?Answer
Selected Answer: b.
Such an increase in the surplus might close an expansionary gap.
Correct Answer: b.
Such an increase in the surplus might close an expansionary gap. . Question 44 .1 out of 1 points If the U.S. government spent $20 million paying people to dig holes in 2005, and then spent $30 million paying the same people to fill the holes up again that same year, we would expect the net effect to be a(n)Answer
Selected Answer: e. increase in the budget deficit as government purchases of goods and services increased by $50 million
Correct Answer: e. increase in the budget deficit as government purchases of goods and services increased by $50 million . Question 45 .1 out of 1 points Crowding out refers to the government's increased demand for credit, whichAnswer
Selected Answer: b. displaces some private sector borrowing by increasing the interest rate
Correct Answer: b. displaces some private sector borrowing by increasing the interest rate . Question 46 .1 out of 1 points The Employment Act of 1946Answer
Selected Answer: a. created the Council of Economic Advisers
Correct Answer: a. created the Council of Economic Advisers . Question 47 .1 out of 1 points During the first 50 years of the Social Security program,Answer
Selected Answer: b. whenever tax revenue exceeded program costs, Congress raised benefits, expanded eligibility, or spent the surplus on something else
Correct Answer: b. whenever tax revenue exceeded program costs, Congress raised benefits, expanded eligibility, or spent the surplus on something else . Question 48 .1 out of 1 points The federal government budget isAnswer
Selected Answer: c. a plan for government expenditures and revenues for the coming year
Correct Answer: c. a plan for government expenditures and revenues for the coming year . Question 49 .1 out of 1 points Which of the following is not a problem with the U.S. federal budget process?Answer
Selected Answer: b. the lack of detail in the budget
Correct Answer: b. the lack of detail in the budget . Question 50 .1 out of 1 points Which of the following has been advanced as a legitimate reason for federal budget deficits?Answer
Selected Answer: a.
Both c and d are legitimate reasons for government budget deficits.
Correct Answer: a.
Both c and d are legitimate reasons for government budget deficits. . Question 51 .1 out of 1 points If government increased Social Security benefits and decreased the salaries of government workers by the same amount, we would expect the immediate effect to beAnswer
Selected Answer: b. no change in the budget deficit because government purchases of goods and services have decreased by the same amount as transfer payments have increased
Correct Answer: b. no change in the budget deficit because government purchases of goods and services have decreased by the same amount as transfer payments have increased . Question 52 .1 out of 1 points U.S. debt has never exceeded 100 percent of GDP because if it did so, the federal government would be bankrupt.Answer
Selected Answer: a.
False
Correct Answer: a.
False
. Question 53 .1 out of 1 points Crowding out occurs byAnswer
Selected Answer: e. reducing the value of the multiplier used for government purchases of goods and services by increasing the interest rate
Correct Answer: e. reducing the value of the multiplier used for government purchases of goods and services by increasing the interest rate . Question 54 .1 out of 1 points Actual federal budgets are not an accurate measure of discretionary fiscal policy becauseAnswer
Selected Answer: b. even without changes in fiscal policy, budget deficits increase during recessions
Correct Answer: b. even without changes in fiscal policy, budget deficits increase during recessions . Question 55 .1 out of 1 points Discretionary expansionary fiscal policy may lead toAnswer
Selected Answer: a. all of the following except d
Correct Answer: a. all of the following except d
