46. Inflationary gap occurs whena. actual output exceeds potential outputb. actual output is less than potential outputc. actual output is equal to potential outputd. actual output and potential rse together47. To close a recessionary gap, the central bank must usea contractionary monetary policyb. contractionary fiscal policyC. expansionary monetary policyd. expansionary fiscal policy48. To ciose an infationary gap, contractionary facal policya. shifts AE ine upwardb. shifts AE downwardc shifts AE = Y identity away fron the ongind. maves AE= Y identity unatered 40. If the expenditure mutiplier in a closed economy without govemmentactivites equais 4 what is the MPC in ths economy?a. 025b. 0.20C. 0.75d. 0.80Use the information below to answer questions 41-43.In an economy at zero disposable income consumption is 1200 milion. Themarginal propensity to save in this economy is 0.2541. What is the consumption function for this economy?a. C 1200 0.25Ydb. C 1200 0.75YAC C-0+0.75Ydd. C=-1200 25Yda42.If Yd = 6000 milion, what is consumption expenditure in this economy?a. 6000 millionb. 5700 millione. 7200 millond. 5200 million43. What is saving in this economy at Yd= 6000 milion?a -1200b. 300C. 1200d. 30044. An increase in minimum wages unmatched by high productivity leads toa. demand pull inflationb. cost push inflatione. imported inflationd. creeping infation45 Full employment occurs whena. actual output exceeds potential outputb. actual output is less than potential outputC. actual output is equal to potential outputd. actual output and potential rise together

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40. If the expendture multiplier in a closed economy without govemment activites equais 4 what is the MPC in th economy? a. 025 b. 0.20 C. 0.75 d. 0.80

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter9: Aggregate Demand

Section: Chapter Questions

Problem 1.1P

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Question

46. Inflationary gap occurs when
a. actual output exceeds potential output
b. actual output is less than potential output
c. actual output is equal to potential output
d. actual output and potential rse together
47. To close a recessionary gap, the central bank must use
a contractionary monetary policy
b. contractionary fiscal policy
C. expansionary monetary policy
d. expansionary fiscal policy
48. To ciose an infationary gap, contractionary facal policy
a. shifts AE ine upward
b. shifts AE downward
c shifts AE = Y identity away fron the ongin
d. maves AE= Y identity unatered

40. If the expenditure mutiplier in a closed economy without govemment
activites equais 4 what is the MPC in ths economy?
a. 025
b. 0.20
C. 0.75
d. 0.80
Use the information below to answer questions 41-43.
In an economy at zero disposable income consumption is 1200 milion. The
marginal propensity to save in this economy is 0.25
41. What is the consumption function for this economy?
a. C 1200 0.25Yd
b. C 1200 0.75YA
C C-0+0.75Yd
d. C=-1200 25Yda
42.If Yd = 6000 milion, what is consumption expenditure in this economy?
a. 6000 million
b. 5700 million
e. 7200 millon
d. 5200 million
43. What is saving in this economy at Yd= 6000 milion?
a -1200
b. 300
C. 1200
d. 300
44. An increase in minimum wages unmatched by high productivity leads to
a. demand pull inflation
b. cost push inflation
e. imported inflation
d. creeping infation
45 Full employment occurs when
a. actual output exceeds potential output
b. actual output is less than potential output
C. actual output is equal to potential output
d. actual output and potential rise together

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