s me: Class: ID: A croeconomics Exam 4 Fall 2017 Itiple Choice uify the letter o
ID: 1109545 • Letter: S
Question
s me: Class: ID: A croeconomics Exam 4 Fall 2017 Itiple Choice uify the letter of the choice that best completes the statement or answers the question. I. In the long run, increases in aggregate demand can only cause inflation a. True b. False 2. A decrease in autonomous investment a shift the aggregate expenditure function upward b. shift the aggregate expenditure function downward c. result in an upward movement along the aggregate expenditure function d. result in a downward movement along the aggregate expenditure function 3. Given the aggregate demand curve, an adverse supply shock would a. increase output and the price level b. decrease output and the price level c. increase output and decrease the price level d. Aggregate expenditure means total or combined spending. a. True b. False decrease output and increase the price level 4. Given the long-run aggregate supply curve, the aggregate demand curve determines a the price level and the output level b. 5. the price level but not the output level the output level but not the price level neither the price level nor the output level c. d. Suppose that when disposable income rises from $3 trillion to $3.2 trillion, consumpt trillion to $2.6 trillion. What is the marginal propensity to consume? a. 0.1 b. 0.2 6. c. 0.5 d. 0.8Explanation / Answer
1> True
In the long run, aggregate supply is vertical, thus there will be no change in the output without a shift of the aggregate supply curve,
2> a> shift upward
More autonomous investment means that the aggregate expenditure rises with more such investment, irrespective of the economic outcome.
3> d> decrease output, increase price level
Reason
if aggregate supply decreases, the quantity must decrease and thus, the price level will rise.
4> True
Reason
Aggregate expenditure is defined as the total amount that firms and households plan to spend on goods and services at each level of income.
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