In the intermediate range of the aggregate supply curve, if government spending increases caused the aggregate demand curve to shift outwards, which of the following ismostlikely to occur?
A. The price level and real GDP will both rise.
B. The price level will not change, but real GDP will increase.
C. The price level will rise, but real GDP will not change.
D. Both the price level and real GDP will not change.
Answer: A
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Difficulties in determining the cyclical pattern in real wage rates from aggregate data are primarily caused by biases due to
A) substitution behavior. B) substantial differences across different business cycles. C) variations in the composition of the labor force over the business cycle. D) changing policy responses to business cycles.
Figure 14-4
In , an unanticipated shift to a more restrictive monetary policy will shift
a.
AD to the right and temporarily increase real GDP.
b.
AD to the left and temporarily reduce real GDP.
c.
AD to the right and SRAS to the left and lead to higher prices (inflation).
d.
both AD and SRAS to the right and lead to an increase in real GDP.
In the market for money, the demand curve is made up of
A. savers. B. neither borrowers nor savers. C. borrowers. D. a combination of borrowers and savers.
The marginal propensity to save is 0.2. Equilibrium GDP will decrease by $50 billion if aggregate expenditures schedule decrease by:
A. $10 billion B. $15 billion C. $16 billion D. $40 billion