1.According to the multiplier effect, the aggregate demand curve will shift to the right ________ the initial increase in government purchases.

a)by less than

b)by more than

c)by the same amount as

d)sometimes by more than and other times by less than

2)Contractionary monetary policy on the part of the Bank of Canada results in

a)a decrease in the money supply, an increase in interest rates, and a decrease in GDP

b)an increase in the money supply, a decrease in interest rates, and an increase in GDP

c)an increase in the money supply, an increase in interest rates, and an increase in GDP

d)a decrease in the money supply, a decrease in interest rates, and a decrease in GDP

3) Health care costs are likely to

a)decline in the future as more Canadians adopt healthier lifestyles.

b)decline as the Canadian population gets younger on average.

c)increase as more people immigrate to Canada.

d)increase as the population ages.

3 )If full-employment GDP is equal to $1.9 trillion, what does the long-run aggregate supply curve look like?

a)It is a vertical line at $1.9 trillion of real GDP.

b)It is a vertical line at a level of real GDP beyond $1.9 trillion

c)It is a horizontal line at $1.9 trillion of real GDP

d)It is a vertical line at a level of real GDP below $1.9 trillion

4.An increase in government purchases of $200 billion will shift the aggregate demand curve to the right by

a)less than $200 billion

b)more than $200 billion

c)$200 billion

d)None of the above are correct. This policy shifts the long-run aggregate supply curve

4.An economy has a fixed price level, no imports, and no income taxes.MPCis 0.5 and real GDP is $300 billion. Businesses increase investment by $10 billion. The new level of real GDP is

$5 billion

$300 billion

$20 billion

$320 billion

5.The Bank of Canada maintains an operating band for the overnight interest rate of

b. 50 basis points below the bank rate.

d. 50 percent of the bank rate.

a. 50 percent of the inflation rate.

c. 50 basis points below the inflation rate.