Deck 10: Economic Fluctuations

Question 1

The per-unit cost of production in this economy is:

A)$0.05
B)$0.10
C)$0.50
D)$1.00
E)$10.00

Answer 1

B

Question 2

What do the wealth and foreign trade effects have in common? They both help to explain:

A)why the aggregate demand curve is downward-sloping
B)why the aggregate supply curve is upward-sloping
C)shifts in the aggregate demand curve
D)shifts in the aggregate supply curve
E)why the aggregate supply curve is downward-sloping

Answer 2

A

Question 3

The investment-demand curve will shift to the right as a result of:

A)a fall in the real interest rate
B)growing pessimism by business owners about future profits
C)a rise in the real interest rate
D)an increase in corporate taxes
E)a technological change that reduces production costs

Answer 3

E

Question 4

An exchange rate:

A)is the ratio of the dollar volume of a nation's exports to the dollar volume of its imports
B)measures the interest rate ratios of any two nations
C)is the amount that one nation must export to obtain $1 worth of imports
D)is the price at which the currencies of any two nations exchange for one another
E)is the ratio of the price level in one country and the GDP level in another

Question 5

Ceteris paribus,if the national incomes of Canada's major international trading partners were to rise,Canada's:

A)aggregate demand curve would shift to the right
B)aggregate supply curve would shift to the left
C)aggregate supply curve would shift to the right
D)aggregate demand curve would shift to the left
E)aggregate demand and aggregate supply curves would both stay constant

Question 6

Ceteris paribus,if the price of each input increased from $4 to $6,productivity would:

A)rise from 2.00 to 3.00
B)fall from 0.50 to 0.33
C)rise from 1.00 to 2.00
D)fall from 3.00 to 2.00
E)remain unchanged

Question 7

Given an increase in the input price from $4 to $6,we would expect the aggregate:

A)supply curve to shift to the left, while potential output remains constant
B)supply curve to shift to the right, while potential output remains constant
C)supply curve to shift to the left, while potential output decreases
D)demand curve to shift to the right
E)demand curve to shift to the left

Question 8

Ceteris paribus,if the international value of the dollar were to fall,the aggregate:

A)demand curve would not shift
B)demand curve would shift to the right
C)supply curve would shift to the right, and potential output would increase
D)demand curve would shift to the left
E)supply curve would shift to the right, and potential output would stay the same

Question 9

The aggregate demand curve:

A)is upward-sloping, because a higher price level makes production more profitable
B)is downward-sloping, because a higher price level makes production more profitable
C)shows the amount of real output that will be produced at each possible price level
D)shows the amount of real output that will be purchased at each possible price level
E)is upward-sloping, because a higher price level increases real expenditures

Question 10

If Canada wants to increase its net exports,it might take steps to:

A)increase its GDP
B)reduce existing tariffs and import quotas
C)decrease the price of the Canadian dollar in terms of foreign currencies
D)increase the price of the Canadian dollar in terms of foreign currencies
E)reduce the unemployment rate

Question 11

An increase in investment spending caused by a decline in the real interest rate will:

A)shift the aggregate supply curve to the left
B)move the economy up along the existing aggregate demand curve
C)shift the aggregate demand curve to the left
D)shift the aggregate supply curve to the right
E)shift the aggregate demand curve to the right

Question 12

Exports have the same macroeconomic effect upon GDP as:

A)imports
B)investment
C)taxes
D)saving
E)unemployment

Question 13

Ceteris paribus,if the price of raw materials rises from $4 to $8 per unit,the per-unit cost of production will rise by about:

A)100 percent
B)50 percent
C)40 percent
D)30 percent
E)20 percent

Question 14

If equilibrium output in an open economy is $1000 billion,and consumption is $700 billion at that level of real output,then:

A)positive unplanned investment must be occurring
B)net exports must be $300 billion
C)G + I + X must equal $300 billion
D)G + I + (X-M) must equal $300 billion
E)G + I must equal $300 billion

Question 15

Which one of the following would not shift the aggregate demand curve?

A)a change in the price level
B)a depreciation of the international value of the Canadian dollar
C)a decline in the interest rate at each possible price level
D)an increase in personal income tax rates
E)households' growing optimism about the future

Question 16

The per-unit cost of production in the economy described above is:

A)$0.50
B)$1.00
C)$10.00
D)$5.00
E)$2.00

Question 17

Ceteris paribus,the real interest rate and the level of planned investment are:

A)unrelated
B)related only when saving and investment are equal
C)inversely related
D)directly related
E)related only when saving and investment are unequal

Question 18

The level of productivity is:

A)20
B)10
C)5
D)4
E)2

Question 19

The factors that affect the amounts that consumers,businesses,government,and foreigners wish to purchase at each price level are:

A)the sole determinants of personal income
B)aggregate supply factors
C)aggregate demand factors
D)the sole determinants of the equilibrium price level and equilibrium real output
E)the economy's injections and withdrawals

Question 20

Ceteris paribus,serious recessions in the economies of our major trading partners will tend to:

A)have no perceptible impact upon our economy
B)cause inflation in our economy
C)depress real output and employment in our economy
D)stimulate real output and employment in our economy
E)stimulate our exports

Question 21

The change in aggregate supply from AS₁ to AS₂ could be caused by:

A)a reduction in the price level
B)the increased availability of entrepreneurial talent
C)an increase in business taxes
D)the wealth effect
E)the foreign trade effect

Question 22

Consider the following table:

$\begin{array}{|l|l|}\hline \text { Input Quantity } & \text { Real Output } \\\hline 100 & 200 \\\hline 150 & 300 \\\hline 200 & 400 \\\hline\end{array}$

-If the price of each input is $5,the per-unit cost of production in this economy is:

A)$5.00
B)$2.75
C)$2.50
D)$0.40
E)$2.00

Question 23

The aggregate supply curve:

A)shows the various amounts of real output that businesses are willing and able to produce at each price level
B)is downward-sloping, because real purchasing power increases as the price level falls
C)is downward-sloping, because real purchasing power decreases as the price level falls
D)is explained by the wealth and foreign trade effects
E)is vertical

Question 24

Which of the following would not shift the aggregate supply curve?

A)an increase in labour productivity
B)a decline in the price of imported oil
C)a decline in business taxes
D)an increase in the price level
E)a rise in wages

Question 25

Aggregate supply factors:

A)are consumption, investment, government, and net export spending
B)explain why real output and the price level are directly related
C)explain the shape of the aggregate supply curve
D)include input prices and productivity
E)do not include technological progress

Question 26

Ceteris paribus,an improvement in productivity will shift the aggregate:

A)supply curve to the right, while potential output remains constant
B)supply curve to the left, while potential output remains constant
C)supply curve to the right, while potential output increases
D)demand curve to the left
E)supply to the left, while potential output decreases

Question 27

$\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Amount of Real } \\\text { Output Demanded }\end{array} & \begin{array} { c } \text { Price Level } \\\text { (index value) }\end{array} & \begin{array} { c } \text { Amount of Real } \\\text { Output Supplied }\end{array} \\\hline \$ 200 & 300 & \$ 475 \\\hline 300 & 250 & 450 \\\hline 400 & 200 & 400 \\\hline 500 & 150 & 300 \\\hline 600 & 100 & 100 \\\hline\end{array}$

-If the price level is 150,then:

A)a surplus of real output of $200 will occur
B)a shortage of real output of $100 will occur
C)a surplus of real output of $300 will occur
D)neither a shortage nor a surplus of real output will occur
E)a shortage of real output of $200 will occur

Question 28

The change in aggregate demand indicated in the previous question might have been caused by a(n):

A)increase in net exports
B)worsening of business expectations
C)increase in consumer wealth
D)decrease in personal income taxes
E)a rise in government purchases

Question 29

Consider the following table:

$\begin{array}{|l|l|}\hline \text { Input Quantity } & \text { Real Output } \\\hline 100 & 200 \\\hline 150 & 300 \\\hline 200 & 400 \\\hline\end{array}$

-The level of productivity in this economy is:

A)2.0
B)0.5
C)4.0
D)200.0
E)150.0

Question 30

Consider the following table:

$\begin{array}{|l|l|}\hline \text { Input Quantity } & \text { Real Output } \\\hline 100 & 200 \\\hline 150 & 300 \\\hline 200 & 400 \\\hline\end{array}$

-Suppose that the price of each input increased from $5 to $8.The per-unit cost of production in this economy would:

A)rise by $1.50, and the aggregate supply curve would shift to the right
B)rise by 60 percent, and the aggregate supply curve would shift to the left
C)rise by 60 percent, and the aggregate demand curve would shift to the right
D)fall by $1.50, and the aggregate demand curve would shift to the right
E)rise by 35 percent, and the aggregate demand curve will shift to the left

Question 31

The changes in aggregate demand and supply produce a(n):

A)higher price level
B)expansion of real output and a stable price level
C)expansion of real output and a higher price level
D)decline in real output and a stable price level
E)decline real output and a higher price level

Question 32

Per-unit production cost is:

A)real output divided by inputs
B)total input cost divided by units of output
C)units of output divided by total input cost
D)an aggregate demand factor
E)nominal output divided by employment

Question 33

Ceteris paribus,a reduction in personal and business taxes can be expected to:

A)increase aggregate demand and decrease aggregate supply
B)increase both aggregate demand and aggregate supply
C)decrease both aggregate demand and aggregate supply
D)decrease aggregate demand and increase aggregate supply
E)increase aggregate supply but keep aggregate demand constant

Question 34

As a result of the price of raw materials rising from $4 to $8 per unit,the aggregate:

A)supply curve would shift to the left, and potential output would remain constant
B)supply curve would shift to the right, and potential output would remain constant
C)supply curve would shift to the left, and potential output would decrease
D)demand curve would shift to the right
E)demand curve would shift to the left

Question 35

If equilibrium real output rises and the equilibrium price level falls,this would likely be due to a:

A)rightward shift of the aggregate demand curve
B)leftward shift of the aggregate supply curve
C)rightward shift of the aggregate supply curve
D)leftward shift of the aggregate demand curve
E)a simultaneous rightward shift in aggregate demand and aggregate supply

Question 36

$\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Amount of Real } \\\text { Output Demanded }\end{array} & \begin{array} { c } \text { Price Level } \\\text { (index value) }\end{array} & \begin{array} { c } \text { Amount of Real } \\\text { Output Supplied }\end{array} \\\hline \$ 200 & 300 & \$ 475 \\\hline 300 & 250 & 450 \\\hline 400 & 200 & 400 \\\hline 500 & 150 & 300 \\\hline 600 & 100 & 100 \\\hline\end{array}$

-The equilibrium price level will be:

A)150
B)100
C)250
D)300
E)200

Question 37

$\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Amount of Real } \\\text { Output Demanded }\end{array} & \begin{array} { c } \text { Price Level } \\\text { (index value) }\end{array} & \begin{array} { c } \text { Amount of Real } \\\text { Output Supplied }\end{array} \\\hline \$ 200 & 300 & \$ 475 \\\hline 300 & 250 & 450 \\\hline 400 & 200 & 400 \\\hline 500 & 150 & 300 \\\hline 600 & 100 & 100 \\\hline\end{array}$

-If the amount of real output demanded at each price level falls by $200,the equilibrium price level and equilibrium level of real output will fall to:

A)250 and $200, respectively
B)200 and $300, respectively
C)150 and $300, respectively
D)150 and $200, respectively
E)300 and $275, respectively

Question 38

Productivity measures:

A)real output per unit of input
B)per-unit production cost
C)the changes in real wealth caused by price level changes
D)the amount of capital goods used per worker
E)the changes in nominal GDP caused by inflation

Question 39

Suppose that wages fall and productivity rises in a particular economy.Ceteris paribus,the aggregate:

A)supply curve will shift leftward, and potential output will remain constant
B)supply curve will shift rightward, and potential output will increase
C)supply curve will shift leftward, and potential output will decrease
D)supply curve will shift rightward, and potential output will remain constant
E)demand curve necessarily shifts rightward

Question 40

The equilibrium price level and level of real output occur where:

A)real output is at its highest possible level
B)exports equal imports
C)the price level is at its lowest level
D)the aggregate demand and supply curves intersect
E)the price level is at its highest level

Question 41

Which of the above diagrams best portrays the effects of an increase in consumer spending?

A)A
B)B
C)C
D)D
E)both A and D

Question 42

In the following table for a hypothetical country, C is consumption, I is investment, G is government purchases, X is exports, and M is imports. All figures in columns (2) to (6) are in billions of dollars

$\begin{array} { | c | c | c | c | c | c | } \hline \begin{array} { c } ( 1 ) \\\text { Price } \\\text { Level }\end{array} & \begin{array} { c } ( 2 ) \\\mathrm { C }\end{array} & \begin{array} { c } ( 3 ) \\\mathrm { I }\end{array} & \begin{array} { c } ( 4 ) \\\mathrm { G }\end{array} & \begin{array} { c } ( 5 ) \\\mathrm { X }\end{array} & \begin{array} { c } ( 6 ) \\\mathrm { M }\end{array} \\\hline 128 & \$ 18 & \$ 2 & \$ 3 & \$ 4 & \$ 5 \\\hline 125 & 20 & 4 & 3 & 4 & 4 \\\hline 122 & 22 & 6 & 3 & 4 & 3 \\\hline 119 & 24 & 8 & 3 & 4 & 2 \\\hline 116 & 26 & 10 & 3 & 4 & 1 \\\hline\end{array}$

-If equilibrium real output is $32 billion in this country,the equilibrium price level will be:

A)128
B)122
C)125
D)119
E)116

Question 43

Which of the above diagrams best portrays the effects of an increase in foreign spending on Canadian products?

A)A
B)B
C)C
D)D
E)both A and D

Question 44

Which of the above diagrams best portrays the effects of declines in the national incomes of our major international trading partners?

A)A
B)B
C)C
D)D
E)both C and D

Question 45

Which of the above diagrams best portrays an improvement in business profit expectations?

A)A
B)B
C)C
D)D
E)both C and D

Question 46

If the aggregate supply curve shifted from AS₀ to AS₁,we could say that:

A)aggregate supply has increased, equilibrium real output has decreased, and the equilibrium price level has increased
B)aggregate supply has decreased, equilibrium real output has decreased, and the equilibrium price level has increased
C)an increase in the amount of real output supplied has occurred
D)aggregate supply has increased, and the equilibrium price level has risen to 0g
E)aggregate supply has decreased, equilibrium real output has increased, and the equilibrium price level has decreased

Question 47

In the following table for a hypothetical country, C is consumption, I is investment, G is government purchases, X is exports, and M is imports. All figures in columns (2) to (6) are in billions of dollars

$\begin{array} { | c | c | c | c | c | c | } \hline \begin{array} { c } ( 1 ) \\\text { Price } \\\text { Level }\end{array} & \begin{array} { c } ( 2 ) \\\mathrm { C }\end{array} & \begin{array} { c } ( 3 ) \\\mathrm { I }\end{array} & \begin{array} { c } ( 4 ) \\\mathrm { G }\end{array} & \begin{array} { c } ( 5 ) \\\mathrm { X }\end{array} & \begin{array} { c } ( 6 ) \\\mathrm { M }\end{array} \\\hline 128 & \$ 18 & \$ 2 & \$ 3 & \$ 4 & \$ 5 \\\hline 125 & 20 & 4 & 3 & 4 & 4 \\\hline 122 & 22 & 6 & 3 & 4 & 3 \\\hline 119 & 24 & 8 & 3 & 4 & 2 \\\hline 116 & 26 & 10 & 3 & 4 & 1 \\\hline\end{array}$

-Which of the following schedules constitutes aggregate demand in this country?
$\quad$ $\quad$ $\quad$ $\quad$$\text { Real Expenditures }$
$\begin{array} { | c | c | c | c | c | } \hline \text { Price } & ( \mathrm { A } ) & ( \mathrm { B } ) & ( \mathrm { C } ) & \text { (D) } \\\hline 128 & 22 & 23 & 27 & 24 \\\hline 125 & 27 & 27 & 31 & 27 \\\hline 122 & 32 & 31 & 35 & 30 \\\hline 119 & 37 & 35 & 39 & 33 \\\hline 116 & 42 & 39 & 43 & 36 \\\hline\end{array}$

A)(A)
B)(B)
C)(C)
D)(D)
E)both (A) and (B)

Question 48

Which of the above diagrams best portrays the effects of a substantial reduction in government spending?

A)A
B)B
C)C
D)D
E)both C and D

Question 49

Ceteris paribus,a shift in the aggregate supply curve from AS₀ to AS₁ might be caused by a(n):

A)increase in government regulation
B)increase in aggregate demand
C)increase in productivity
D)decline in wages
E)fall in natural resource prices

Question 50

If aggregate supply is AS₁ and aggregate demand is AD₀,then:

A)at any price level above 0g, a shortage of real output would occur
B)0f represents a price level that would result in a surplus of real output of ac
C)a surplus of real output of gh would occur
D)0f represents a price level that would result in a shortage of real output of ac
E)0f represents a price level that would result in a surplus of real output of 0a

Question 51

Which of the above diagrams best portrays the effects of an increase in resource productivity?

A)A
B)B
C)C
D)D
E)both A and B

Question 52

If personal taxes were lowered and input productivity rose simultaneously,we could predict that the equilibrium:

A)real output would rise
B)real output would fall
C)price level would necessarily fall
D)price level would necessarily rise
E)price level would necessarily stay the same

Question 53

A shift in the aggregate demand curve from AD₀ to AD₁ might be caused by a(n):

A)decrease in aggregate supply
B)decrease in the amount of output supplied
C)increase in investment spending
D)decrease in net export spending
E)increase in government purchases

Question 54

If aggregate demand increases and aggregate supply decreases,the price level:

A)will decrease, but real output may either increase or decrease
B)will increase, but real output may either increase or decrease
C)and real output will both increase
D)and real output will both decrease
E)will decrease, but real output will necessarily stay the same

Question 55

If the initial aggregate demand and supply curves are AD₀ and AS₀,the equilibrium price level and real output will be:

A)0f and 0c, respectively
B)0g and 0b, respectively
C)0f and 0a, respectively
D)0e and 0b, respectively
E)0e and 0a, respectively

Question 56

In which of the following sets of circumstances can we confidently expect inflation?

A)aggregate supply and aggregate demand both increase
B)aggregate supply and aggregate demand both decrease
C)aggregate supply decreases and aggregate demand increases
D)aggregate supply increases and aggregate demand decreases
E)aggregate supply increases and aggregate demand stays constant

Question 57

Which of the above diagrams best portrays the effects of a decrease in the availability of key natural resources?

A)A
B)B
C)C
D)D
E)both A and B

Question 58

Which of the above diagrams best portrays the effects of a dramatic decrease in the amount of capital resources available to the economy?

A)A
B)B
C)C
D)D
E)both C and D

Question 59

We would expect a decrease in personal and corporate income taxes to:

A)shift the aggregate demand curve rightward
B)increase consumption spending
C)increase equilibrium real output
D)increase investment spending
E)shift AD rightward, increase consumption and investment spending, and increase equilibrium real output

Question 60

We would expect an increase in input productivity to:

A)shift the aggregate demand curve leftward
B)increase the equilibrium price level
C)reduce equilibrium real output
D)shift the aggregate demand curve rightward
E)shift the aggregate supply curve rightward

Question 61

If equilibrium real output is Q₂,then:

A)aggregate demand is AD₁
B)the equilibrium price level is P₁
C)producers will supply output level Q₁
D)the equilibrium price level is P₂
E)there would be positive unplanned investment at P₁

Question 62

Which of the following statements is correct?

A)Unplanned investment is zero only at equilibrium.
B)All price levels where unplanned investment is positive are too low for equilibrium.
C)All price levels where unplanned investment is negative are too high for equilibrium.
D)Unplanned investment is zero at all possible price levels.
E)Unplanned investment is zero at all possible price levels below equilibrium.

Question 63

Muldrania's real output rose from $400 billion in year 1 to $428 billion in year 2.The growth rate in real output for this period was:

A)14 percent
B)12 percent
C)9 percent
D)8 percent
E)7 percent

Question 64

What will be the effect of positive unplanned investment?

A)a decline in the rate of interest
B)an unintended reduction in inventories by businesses
C)a rise in the price level
D)a fall in the price level
E)a rise in the rate of interest

Question 65

In the following table for a hypothetical country, C is consumption, I is investment, G is government purchases, X is exports, and M is imports. All figures in columns (2) to (6) are in billions of dollars

$\begin{array} { | c | c | c | c | c | c | } \hline \begin{array} { c } ( 1 ) \\\text { Price } \\\text { Level }\end{array} & \begin{array} { c } ( 2 ) \\\mathrm { C }\end{array} & \begin{array} { c } ( 3 ) \\\mathrm { I }\end{array} & \begin{array} { c } ( 4 ) \\\mathrm { G }\end{array} & \begin{array} { c } ( 5 ) \\\mathrm { X }\end{array} & \begin{array} { c } ( 6 ) \\\mathrm { M }\end{array} \\\hline 128 & \$ 18 & \$ 2 & \$ 3 & \$ 4 & \$ 5 \\\hline 125 & 20 & 4 & 3 & 4 & 4 \\\hline 122 & 22 & 6 & 3 & 4 & 3 \\\hline 119 & 24 & 8 & 3 & 4 & 2 \\\hline 116 & 26 & 10 & 3 & 4 & 1 \\\hline\end{array}$

-If equilibrium real output is $42 billion in this country,the level of consumption will be:

A)$18 billion
B)$20 billion
C)$26 billion
D)$24 billion
E)$22 billion

Question 66

If population is expanding at the same rate as real output,we would expect:

A)real per capita output to increase
B)real per capita output to decrease
C)real per capita output to remain unchanged
D)real output to decrease
E)real output to stay the same

Question 67

What do investment and government purchases have in common?

A)Both represent injections to the income-spending stream.
B)Both represent withdrawals from the income-spending stream.
C)Neither affects aggregate demand.
D)Both are influenced by the wealth effect.
E)Both are influenced by the foreign trade effect.

Question 68

If the equilibrium price level is P₁,then:

A)aggregate demand is AD₂
B)the equilibrium output level is Q₃
C)the equilibrium output level is Q₂
D)producers will supply output level Q₁
E)there is negative unplanned investment at this price

Question 69

Taxes represent a(n):

A)withdrawal of purchasing power, like saving
B)injection of purchasing power, like investment
C)injection of purchasing power, like saving
D)withdrawal of purchasing power, like investment
E)withdrawal and an injection of purchasing power, like both saving and investment

Question 70

If a nation's real GDP is growing by 5 percent per year,its real GDP will double in approximately:

A)22 years
B)20 years
C)14 years
D)18 years
E)5 years

Question 71

In the following table for a hypothetical country, C is consumption, I is investment, G is government purchases, X is exports, and M is imports. All figures in columns (2) to (6) are in billions of dollars

$\begin{array} { | c | c | c | c | c | c | } \hline \begin{array} { c } ( 1 ) \\\text { Price } \\\text { Level }\end{array} & \begin{array} { c } ( 2 ) \\\mathrm { C }\end{array} & \begin{array} { c } ( 3 ) \\\mathrm { I }\end{array} & \begin{array} { c } ( 4 ) \\\mathrm { G }\end{array} & \begin{array} { c } ( 5 ) \\\mathrm { X }\end{array} & \begin{array} { c } ( 6 ) \\\mathrm { M }\end{array} \\\hline 128 & \$ 18 & \$ 2 & \$ 3 & \$ 4 & \$ 5 \\\hline 125 & 20 & 4 & 3 & 4 & 4 \\\hline 122 & 22 & 6 & 3 & 4 & 3 \\\hline 119 & 24 & 8 & 3 & 4 & 2 \\\hline 116 & 26 & 10 & 3 & 4 & 1 \\\hline\end{array}$

-If this nation's potential output is at the $27 billion level of real GDP,the associated price level will be:

A)128
B)119
C)122
D)125
E)116

Question 72

A recessionary gap can best be described as the amount by which:

A)equilibrium output exceeds potential output
B)equilibrium output falls short of potential output
C)injections exceed withdrawals at the level of potential output
D)real expenditures exceed potential output
E)withdrawals exceed injections at the level of potential output

Question 73

Which of the following could be considered to be the best measure of an improvement in living standards?

A)an increase in nominal GDP
B)an increase in real per capita GDP
C)an increase in gross investment
D)an increase in real GDP
E)an increase in government purchases

Question 74

If a nation's real output is growing by 8 percent per year,its real output will double in approximately:

A)22 years
B)20 years
C)8 years
D)5 years
E)9 years

Question 75

Suppose that aggregate demand increased from AD₁ to AD₂.For the price level to stay constant:

A)the aggregate supply curve would have to shift rightward
B)the aggregate supply curve would have to shift leftward
C)real output would have to remain constant
D)the aggregate supply curve would have to be vertical
E)the AS curve would have to be downward-sloping

Question 76

An inflationary gap can best be described as the amount by which:

A)equilibrium output exceeds potential output
B)real expenditures exceed any given level of real output
C)withdrawals exceed injections at the level of potential output
D)real expenditures fall short of potential output
E)withdrawals exceed injections at all levels of potential output

Question 77

In any economy:

A)government purchases and saving are injections, while investment and taxes are withdrawals
B)taxes and government purchases are withdrawals, while investment and saving are injections
C)taxes and saving are withdrawals, while investment and government purchases are injections
D)taxes and investment are injections, while saving and government purchases are withdrawals
E)government purchases and saving are withdrawals, while investment and taxes are injections

Question 78

If the real output of a low-income country increases from $200 billion to $260 billion and its population increases from 100 to 120 million,its real per capita output will have:

A)remained unchanged
B)increased by about $167
C)increased by about $55
D)decreased by about $20
E)increased by $60 billion

Question 79

In the following table for a hypothetical country, C is consumption, I is investment, G is government purchases, X is exports, and M is imports. All figures in columns (2) to (6) are in billions of dollars

$\begin{array} { | c | c | c | c | c | c | } \hline \begin{array} { c } ( 1 ) \\\text { Price } \\\text { Level }\end{array} & \begin{array} { c } ( 2 ) \\\mathrm { C }\end{array} & \begin{array} { c } ( 3 ) \\\mathrm { I }\end{array} & \begin{array} { c } ( 4 ) \\\mathrm { G }\end{array} & \begin{array} { c } ( 5 ) \\\mathrm { X }\end{array} & \begin{array} { c } ( 6 ) \\\mathrm { M }\end{array} \\\hline 128 & \$ 18 & \$ 2 & \$ 3 & \$ 4 & \$ 5 \\\hline 125 & 20 & 4 & 3 & 4 & 4 \\\hline 122 & 22 & 6 & 3 & 4 & 3 \\\hline 119 & 24 & 8 & 3 & 4 & 2 \\\hline 116 & 26 & 10 & 3 & 4 & 1 \\\hline\end{array}$

-If this nation's equilibrium price level is 125,its net exports will be:

A)-$4 billion
B)-$2 billion
C)$0
D)$2 billion
E)$4 billion

Question 80

Which of the following would shift the aggregate demand curve from AD₂ to AD₁?

A)a decline in personal income tax rates
B)an increase in the international value of the dollar
C)a higher level of government purchases
D)an upward revision of profit expectations on investment projects
E)an increase in exports