Three introductory questions, choose the simplest correct answer no explanation

Question

Three introductory questions, choose the simplest correct answer no explanation required 5 marks Price Level LRAS AS AD 800 150 Real CDP lacome (Y Billions of Dollars 1. In diagram above. The cconomy is currently operating at S800 billion. Suppose the federal government increases purchases. As a result, the: a. aggregate demand shifts right causing unemployment and real GDP to fall. b. c. d. aggregate supply shifts left causing unemployment to rise and real GDP to fall. aggregate supply shifts right causing unemployment to rise and real GDP to rise. aggregate demand shifts right causing unemployment to fall and real GDP to rise. 2. Assume the US population is 300 million, 75 million are too young to work, 141 million are working and 9 million are unemployed and looking for work, what is the unemployment rate? a, 4% b, 6% c. 64% d, 12% 3. If the U.S. dollar appreciates in the forcign exchange market, U.S. exports will beand US, imports will be, -. a. relatively less expensive; relatively less expensive b. relatively less expensive; relatively more expensive c. relatively more expensive; relatively less expensive d. relatively more expensive; relatively more expensive e. unaffected; relatively less expensive

Explanation / Answer

Answer.)

Q1.) c.) Aggregate demand shifts right causing unemployment to fall and real GDP to rise.

Rise in government spending will shift aggregate demand curve rightward to fill recessionary gap resulting in higher real GDP and higher price level.

Q2.) a.) 4%

Unemployment rate = 9 / (300-75) = 0.04 or 4%

Q3.) c.) Relatively more expensive ; relatively less expensive.

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