Investment ($B) Real Domestic Product, GDP (SB) Refer to the diagrams. Other things equal, an interest rate decrease will O A, shift curve A to the left and shift curve B downward. O B. leave curve A in place but shift curve B downward. OC. shift curve A to the right and shift curve B upward. OD. leave curve A in place but shift curve B upward. Expected Rate of Retum, and Real Interest Rate, I 09 Investment ($8)

Investment ($B) Real Domestic Product, GDP (SB) Refer to the diagrams. Other things equal, an interest rate decrease will O A, shift curve A to the left and shift curve B downward. O B. leave curve A in place but shift curve B downward. OC. shift curve A to the right and shift curve B upward. OD. leave curve A in place but shift curve B upward. Expected Rate of Retum, and Real Interest Rate, I 09 Investment ($8)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Quèstion 12 AD2 AD1 AD3 Real Domestic Product, GDP Refer to the graph. Which of the following changes will shift AD1 to AD2? O A. an increase in the value of the dollar relative to other currencies. O B. an increase in real interest rates. OC a shrinkage in the value of stocks and other financial assets. O D. a cut in personal and business taxes. Price Level
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QUESTION 7 Keisha's income was $52,342 in 2011 and $64,983 in 2021. If the CPl rose from 225 to 271 between 2011 and 2021, which of the folowing is true? OA The purchasing power of Keisha's income remained constant between 2011 and 2021. O B. There was deflation between 2011 and 2021. OC The purchasing power of Keisha's income increased between 2011 and 2021. O D. The purchasing power of Keisha's income decreased between 2011 and 2021. O E. Keisha's income in 2011 was equivalent to her income in 2021 because she was able to purchase the same amount of goods and services.
The expenditure approach measures GDP by adding together Select one: O A. wages, salaries and supplementary labour income, and other factor incomes. O B. the total expenditures of consumers, firms, net exporters, and by governments at all levels. O C. wages, salaries and supplementary labour income, other factor income, subsidies paid by the government, indirect taxes paid, and income of nonfarm unincorporated businesses. the total expenditures of consumers and firms. compensation of employees, rental income, corporate profits, net interest, proprietors' income, indirect taxes paid, and capital consumption expenditures, and by subtracting subsidies paid by the government. O D. O E.
QUESTION 14 Expenditures, Income Price level 60 50 40 30 20 10 80 70 60 50 40 30 20 10 0 0 0 10 Qe Qf0 40 50 LRAS 10 Qe20 Qf 30 O (d) All the above. O (e) Only (a) and (b) are true O (f) None of the above. AE1 AE* ΑΕo real GDP = Q ADO AS AD1 40 50 real GDP = Q 14. Which of he following statements accurately explain the scenario illustrated by these diagrams? O (a) Assuming ADo and AEo are the original positions of the AD and AE curves respectively, the original situation illustrated is a recessionary gap of 10. O (b) To restore full-employment equilibrium Aggregate Expenditures must be increased to AE1 which is equivalent to shifting the AD curve to AD1 O (c) Because the short-run Aggregate Supply (AS) curve is upward sloping, the shift in AD will be associated with some products price inflation. This will cause the AE curve to decline from AE1 to AE* because of the wealth, interest rate, and trade effects of inflation.
A high interest rate will lead to: O a. low investment spending. O b. no investment spending. no changes in investment spending. O d. high investment spending. C.
Choose which statement is most correct. Nominal GDP must always equal potential GDP. O a. O b. Real GDP can never exceed potential GDP. O C. Nominal GDP can never exceed potential GDP. O d. Real GDP must always equal potential GDP. O e. At times, real GDP can exceed potential GDP.
8. The individual's budget line (in the neo-classical consumption - leisure choice model) switches from BL₁ to BL2. What change(s) could have caused this? C BL₁ BL 2 a decrease in the wage only. T l O an increase in the wage only. O an increase in non-labor income only. O an increase in both the wage and non-labor income. O a decrease in the wage, but an increase in non-labor income.
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