Table 10-1
Aggregate Quantity
Aggregate Quantity
?
Demanded
Supplied
Price
(billions)
(billions)
Level
$3500
$2900
65
3400
3000
75
3350
3150
90
3250
3250
110
3100
3400
130
In Table 10-1, what is the equilibrium level of real output and the equilibrium price?
A. $3,100 real output and a price of 75
B. $3,250 real output and a price of 110
C. $3,350 real output and a price of 90
D. $3,400 real output and a price of 75
Answer: B
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Pat earns $25,000 per year (after taxes), and Pat's spouse, Chris, earns $35,000 (after taxes). They have two pre-school-aged children. Childcare for their children costs $12,000 per year. Given that Chris doesn't want to stay home with the kids, regardless of what Pat does, Pat should stay home with the kids if, and only if, the value of Pat spending more time with the kids is greater than:
A. $37,000 per year. B. $13,000 per year. C. $25,000 per year. D. $12,000 per year.
The Fed conducts an open market purchase of securities of $5,000. If the currency drain ratio is 0 percent and the desired reserve ratio is 10 percent, then the total increase in the quantity of money is
A) $4,000. B) $5,000. C) $20,000. D) $50,000. E) $10,000.
Everything else held constant, an increase in government spending will cause
A) aggregate demand to increase. B) aggregate demand to decrease. C) the quantity of aggregate demand to increase. D) the quantity of aggregate demand to decrease.
Macroeconomists are interested in how consumers respond to changes in the market real interest rate because
A) interest rates are an important channel for the effects of monetary and fiscal policies. B) substitution effects and income effects net out in the aggregate. C) of the permanent income hypothesis. D) future income affects current consumption.