Exhibit 0040 I Aggregate I demand 7 The graph in Exhibit 0040 shows a(n) a. incr

Question

Exhibit 0040 I Aggregate I demand 7 The graph in Exhibit 0040 shows a(n) a. increase in short-run aggregate supply b. increase in long-run aggregate supply c. decrease in short-run aggregate supply d. decrease in long-run aggregate supply Exhibit 10-1 (trillions of dollars) Ptarmed Aggregate Real Net Disposable Con- GDP Taxes Income sumption Seving Investment Purcheses Experts(- Planned Gover nment Net CY) (NT) (Y-NT) (C) 5.0 1.0 4.0 6.0 1.0 5.0 5.2 3.9 0.1 4.3 4.7 0.3 1.0 5.1 0.4 1.0 5.5 0.5 1.0 0.7 -0.7 -0.7 -0.7 1.0 1.0 1.0 1.0 1.0 5.6 6.0 6.4 4.5 6.5 1.0 6.8 5.5 6.0 -0.7 7.0 1.0 The marginal propensity to save (MPS) in Exhibit 10-1 equals a. b. c. d. 8· 0.20 or 1/5 0.40 or 2/5 0.10 or 1/10 0.80 or 4/5 9. In Exhibit 10-1, the equilibrium level of GDP is a. $5.0 trillion b. $5.5 trillion c. $6.0 trillion d. $6.5 trillion

Explanation / Answer

7) C. A decrease in short run aggregate supply will shift the supply curve leftward

8) A. MpS=change in Saving/change in Y=0.1/0.5=0.2

9) C. 6trillion is equilibrium level of GDp because Y=Aggregate expenditure

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