Question 40 According to liquidity preference theory, if the price level increases, then the equilibrium interest rate Answer rises and the aggregate quantity of goods demanded rises. rises and the aggregate quantity of goods demanded falls. falls and the aggregate quantity of goods demanded rises. falls and the aggregate quantity of goods demanded falls. Question 41 If the MPC = 3/5, then the government purchases multiplier is 5/3 5/2 5 1.5 Question 42 If the multiplier is 5, then the MPC is Answer 0.05 0.5 0.6 0.8 Question 43 In a certain economy, when income is $200, consumer spending is $145. The value of the multiplier for this economy is 6.25. It follows that, when income is $230, consumer spending is Answer $151.25. $166.75. $170.20. $175.00. Question 44 If the MPC is 0.80 and there are no crowding-out or accelerator effects, then an initial increase in aggregate demand of $100 billion will eventually shift the aggregate demand curve to the right by Answer $80 billion. $125 billion. $500 billion. $800 billion. Question 45 Suppose that the MPC is 0.60; there is no investment accelerator; and there are no crowding-out effects. If government expenditures increase by $25 billion, then aggregate demand Answer shifts rightward by $62.5 billion. shifts rightward by $50.0 billion. shifts rightward by $32.5 billion. None of the above is correct. Question 46 The economist A.W. Phillips published a famous article in 1958 in which he showed a negative correlation between the rate of unemployment and the rate of inflation. positive correlation between the rate of unemployment and the rate of inflation. negative correlation between the rate of unemployment and the rate of interest. positive correlation between the rate of unemployment and the rate of interest Question 47 In the short run, policy that changes aggregate demand changes Answer both unemployment and the price level. neither unemployment nor the price level. only unemployment. only the price level. Question 48 If policymakers decrease aggregate demand, then in the short run the price level Answer falls and unemployment rises. and unemployment fall. and unemployment rise. rises and unemployment falls. Question 49 If the central bank increases the money supply, then in the short run prices Answer rise and unemployment falls. fall and unemployment rises. and unemployment rise. and unemployment fall. Question 50 According to the short-run Phillips curve, if the central bank increases the money supply, then Answer inflation and unemployment will both fall. inflation and unemployment will both rise. inflation will fall and unemployment will rise. inflation will rise and unemployment will fall.
Question 40
According to liquidity preference theory, if the price level increases, then the equilibrium interest rate
Answer
rises and the aggregate quantity of goods demanded rises.
rises and the aggregate quantity of goods demanded falls.
falls and the aggregate quantity of goods demanded rises.
falls and the aggregate quantity of goods demanded falls.
Question 41
If the MPC = 3/5, then the government purchases multiplier is
5/3
5/2
5
1.5
Question 42
If the multiplier is 5, then the MPC is
Answer
0.05
0.5
0.6
0.8
Question 43
In a certain economy, when income is $200, consumer spending is $145. The value of the multiplier for this economy is 6.25. It follows that, when income is $230, consumer spending is
Answer
$151.25.
$166.75.
$170.20.
$175.00.
Question 44
If the MPC is 0.80 and there are no crowding-out or accelerator effects, then an initial increase in aggregate
Answer
$80 billion.
$125 billion.
$500 billion.
$800 billion.
Question 45
Suppose that the MPC is 0.60; there is no investment accelerator; and there are no crowding-out effects. If government expenditures increase by $25 billion, then aggregate demand
Answer
shifts rightward by $62.5 billion.
shifts rightward by $50.0 billion.
shifts rightward by $32.5 billion.
None of the above is correct.
Question 46
The economist A.W. Phillips published a famous article in 1958 in which he showed a
negative correlation between the rate of
positive correlation between the rate of unemployment and the rate of inflation.
negative correlation between the rate of unemployment and the rate of interest.
positive correlation between the rate of unemployment and the rate of interest
Question 47
In the short run, policy that changes aggregate demand changes
Answer
both unemployment and the price level.
neither unemployment nor the price level.
only unemployment.
only the price level.
Question 48
If policymakers decrease aggregate demand, then in the short run the price level
Answer
falls and unemployment rises.
and unemployment fall.
and unemployment rise.
rises and unemployment falls.
Question 49
If the central bank increases the money supply, then in the short run prices
Answer
rise and unemployment falls.
fall and unemployment rises.
and unemployment rise.
and unemployment fall.
Question 50
According to the short-run
Answer
inflation and unemployment will both fall.
inflation and unemployment will both rise.
inflation will fall and unemployment will rise.
inflation will rise and unemployment will fall.
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