Macroeconomics

‭7. Hurricanes, technical issues, and limitations on the use of resources can all result in:‬

‭A.‬ ‭deflation.‬ ‭B.‬ ‭supply shocks.‬ ‭C.‬ ‭demand-pull inflation.‬ ‭D.‬ ‭a vertical aggregate demand curve.‬

‭8.‬ ‭Suppose‬ ‭that‬ ‭a‬ ‭person‬ ‭buys‬ ‭an‬ ‭ice‬ ‭cream‬ ‭in‬ ‭the‬ ‭U.S.‬ ‭for‬ ‭$1‬ ‭and‬ ‭the‬ ‭Marginal‬ ‭Propensity‬ ‭to‬ ‭Consume‬‭(MPC)‬‭in‬‭the‬‭U.S.‬‭is‬‭0.6.‬‭What‬‭is‬‭the‬‭total‬‭increase‬‭in‬‭the‬‭U.S.‬‭real‬‭GDP‬‭resulting‬‭from‬‭this‬ ‭person’s purchase?‬ ‭A.‬ ‭$2.5‬ ‭B.‬ ‭$1.6‬ ‭C.‬ ‭$1.5‬ ‭D.‬ ‭$0.6‬ ‭9.‬‭An‬‭economy‬‭is‬‭in‬‭long-run‬‭equilibrium‬‭at‬‭the‬‭full‬‭employment‬‭level.‬‭What‬‭happens‬‭if‬‭government‬ ‭spending increases?‬ ‭A.‬ ‭A recessionary gap is created because the aggregate demand curve shifts to the left.‬ ‭B.‬ ‭A recessionary gap is created because the aggregate supply curve shifts to the left.‬ ‭C.‬ ‭An inflationary gap is created because the aggregate demand curve shifts to the right.‬ ‭D.‬ ‭An inflationary gap is created because the aggregate supply curve shifts to the right.‬ ‭10.‬‭A‬‭decrease‬‭in‬‭real‬‭investment‬‭arising‬‭from‬‭higher‬‭interest‬‭rates‬‭due‬‭to‬‭government‬‭purchases‬‭is‬ ‭referred to as:‬

‭A.‬ ‭self-correction.‬ ‭B.‬ ‭the multiplier effect.‬ ‭C.‬ ‭output gap.‬ ‭D.‬ ‭crowding out.‬

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