Exhibit 20-5 Money, investment and product markets
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In Exhibit 20-5, a shift in aggregate demand from AD1 to AD2:
A. cannot raise real GDP because the economy is at full employment.
B. cannot raise real GDP because the aggregate supply curve is upward sloping at GDP2.
C. will raise real GDP because the economy is operating below the full-employment level.
D. will cause the interest rate to increase from i2 to i1.
Answer: C
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Use the following graph to answer the next question.
Which point is not on the perfectly competitive firm's short-run supply curve?
A. E B. F C. G D. H
If the 15th unit of output has a marginal cost of $29.50 and the average cost of producing 14 units of output is $30.23, what will happen to the average cost of production if the 15th unit is produced?
A) Average cost will fall. B) Average cost could increase or decrease depending on what happens to fixed cost. C) Average cost increases as more is produced. D) Average cost could increase or decrease depending on what happens to variable cost.
Everything else held constant, if a central bank makes a sterilized purchase of foreign assets, then the domestic currency will
A) appreciate. B) depreciate. C) either appreciate, depreciate, or remain constant. D) not be affected.
Refer to Scenario 5.3. Based on the 10 years' past performance, what is the probability of a good year for Zowiebo?
A) 30/31 B) 1/31 C) 0.9 D) 0.1