ANSWER KEY ONLY THANKS

1.If MPC is given as 0.9 and the change in disposable income is $200. The change in consumption will be

A.$20

B.$180

C.$200

D.$222.22

2.Which of the following will increase Aggregate Expenditure (AE):

A.Fall in interest rates.

B.Rise in income tax.

C.Rise in Business tax.

D.Fall in export.

3.A rise in domestic country real GDP will

A.decrease export and AE.

B.increase export and AE.

C.increase import but reduce AE.

D.increase import and AE.

4.When aggregate expenditures fall, total output and employment

A.increase.

B.stay constant.

C.decrease.

D.rise initially but will fall eventually.

5."When an economy is experiencing inflationary gap, a rise in rental cost will "

A.reduce SAS and shifts the SAS curve to the right.

B.decrease LAS and shifts the LAS curve to the left.

C.reduce SAS and shifts the SAS curve to the left.

D.reduce AD and shifts the AD curve to the left.

6.A natural disaster will

A.reduce SAS and hence increase the price level and real GDP.

B.reduce SAS and hence increase the price level but reduce real GDP.

C.reduce AD and hence reduce the price level and real GDP.

D.reduce LAS and hence increase the price level but reduce real GDP.

7.When an economy is experiencing an inflationary gap

A.its actual real GDP is equal to the potential real GDP.

B.its actual real GDP is less than potential real GDP.

C.it is producing at full employment.

D.its actual real GDP is more than potential real GDP.

8.A rise in the price level will cause a/an

A.shifts of the AD curve to the right.

B.Shifts of the AD curve to the left.

C.downward movement along the AD curve.

D.upward movement along the AD curve.

9."When Country Y actual real GDP is more than potential real GDP, it is experiencing __________ ."

A.inflationary gap

B.full employment

C.recessionary gap

D.long-run macroeconomic equilibrium

10.When an economy is experiencing recessionary gap, a rise in wealth will

A.shifts the AD curve to the right and increase the price level and real GDP.

B.shifts the AD curve to the left and reduce the price level and real GDP.

C.shifts the SAS curve to the left and increase the price level and real GDP.

D.shifts the SAS curve to the right and reduce the price level and real GDP.