21) If the MPC is .8 and there is a $10 million increase in investment spending,
ID: 1101066 • Letter: 2
Question
21) If the MPC is .8 and there is a $10 million increase in investment spending, then the aggregate demand curve will shift up and to the right by: 21) ______
A) $50 million. B) $12.5 million. C) $8 million. D) $2 million.
22) Which of the following is a federal and state health program that benefits the elderly? 22) ______
A) Defense B) Medicare C) Medicaid D) Social Security
25) If an economy's marginal propensity to consume is 0.6 and the marginal propensity to import is 0.1, then an increase in government spending of $1,000 will increase income by: 25) ______
A) $2,500.
B) $1,250.
C) $2,000.
D) $1,667.
29) The level of the stock market and the level of investment spending tend to be related because the higher the share price is: 29) ______
A) the more capital can be raised by issuing new stock.
B) the higher the retained earnings are going to be.
C) the higher the present value of any given future payment.
D) the cheaper it would be to sell corporate bonds.
Rising wages and input prices: 37) ______
A) cause the aggregate supply curve to shift to the left.
B) cause the aggregate supply curve to shift to the right.
C) cause the aggregate demand curve to shift to the left.
D) cause the aggregate demand curve to shift to the right.
36) In the short run, which of the following determines the level of real GDP? 36) ______
A) aggregate demand
B) wages
C) prices
D) stock prices
The decisions concerning the money supply are made by: 32) ______
A) the presidents of the district central banks.
B) the FOMC.
C) Congress.
D) the Board of Governors.
Explanation / Answer
21.) A
22.) B
25.) C
29.) A
37.) A ; Aggregate supply curve to left
36.) A ; Aggregate demand
32.) A
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