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1 1. Assume the economy is in a long-run equilibrium in the AD=SAS model when an unanticipated decrease in AD occurs. If "natural forces" were to move the economy to a long-run equilibrium then wages and the prices of raw materials will: a. Increase, which moves the Short-Run Aggregate Supply (SAS) curve to the left. b. Increase, which moves the Short-Run Aggregate Supply (SAS) curve to the right. c. Increase, which moves the Aggregate Demand (AD) curve to the left. d. Decrease, which moves the Short-Run Aggregate Supply (SAS) curve to the left. e. Decrease, which moves the Short-Run Aggregate Supply (SAS) curve to the right. 12. Zane's disposable income in Year #1 was $50,000 and he spent $40,000. In Year #2 his disposable income was $75,000 and he spent $50,000. From these data we can conclude that Zane's Marginal Propensity to Consume is (MPC=) and his Marginal Propensity to Save is (MPS=) a. MPC = 0.60; MPS = 0.40. b. MPC = 0.75; MPS = 0.25. c. MPC = 1.00; MPS = 0.00. d. MPC = 0.25; MPS = 0.75 e. MPC = 0.40; MPS = 0.60. 13. During a certain year, all of the items in the calculation of Gross Domestic Product (GDP) remained the same except for an increase in the dollar value of goods brought into the United States from foreign countries ($IM). This indicates that GDP in the United States was: a. Higher than before because the additional income was generated by Americans. b. Higher than before because the additional income was not generated by Americans. c. Unchanged because foreign transactions are not included in GDP calculations. d. Lower than before because the additional income was not generated by Americans. e. Lower than before because the additional income was generated by Americans. 14. Assume the required reserve ratio is 10 percent (rr = 0.10) and Danielle withdraws $10,000 in cash from her Demand Deposit (DD) account at the Aynor Beach National Bank (ABNB). The immediate and direct effect of this is that Excess Reserves (ER) of ABNB will and M-1 will in. In coo What a. Decrease by $10,000; increase by $1,000. rice. Brow a b. Decrease by $9,000; decrease by $10,000. and your Label the dinner c. Decrease by $9,000; not change. d. Decrease by $10,000; decrease by $10,000. e. Decrease by $1,000; not change. 15. Which of the following statements regarding the relationship between the real rate of interest (r), the nominal rate of interest (n), and the rate of inflation (p) is/are accurate? (1) If r is 7% and n is 9% then p is 2%. (2) If p is 7% and r is 2% then n is 5%. (3) If n is 7% and p is 3% then r is 4%. a. Only statement (3) is accurate. b. All of the statements are accurate. c. Only statements (1) and (3) are accurate. d. Only statements (1) and (2) are accurate. e. Only statements (2) and (3) are accurate. 16. At the current level of Real Gross Domestic Product (RGDP), assume an economy's Marginal Propensity to Consumer is (MPC=) 0.75. If Investment spending increases (AI=) $10 Million and Government spending increases (AG=) $15 Million, then the equilibrium level of Real Gross Domestic Production will (ARGDP=)_ a. Increase by $25 Million. b. Increase by $100 Million. c. Not available with the information provided. d. Increase by $15 Million. c. Increase by $10 Million