Planned aggregate spending. ABM (billions of dollars) 54.000 3.500 AEHanned 3.000 CF 2,000 800 l 300 0 8500 1.000 1.500 2.000 2.500 3.000 3.500 4,000 Real GDP (billions of dollars) Reference: Ref 1119 (Figure: The Aggregate Consumption Function and Planned Aggregate Spending) Look at the table The Aggregate Consumption Function and Planned Aggregate Spending. If expected disposable income decreases in this economy, then the: O A) economy will move downward along the aggregate expenditures curve. 0 B) aggregate expenditures curve will shift down. 0 0 economy will move upward along the aggregate expenditures curve. 0 D) aggregate expenditures curve will shift up. Table: The Economy of Albernia Real GDP Disposable Consumption Planned (in billions) Income (in billions) Investment (in billions) (in billions) $ 0 $ 0 $ 400 $600 500 500 700 600 1,000 1,000 1,000 600 1,500 1,500 1,300 600 2,000 2,000 1,600 600 2,500 2,500 1,900 600 3,000 3,000 2,200 600 Reference: Ref 11-13 (Table: The Economy of Albernia) Look at the table The Economy of Albernia. If real GDP is $1,500 billion, then the level of unplanned inventories is: O A) $400 billion. 0 B) $600 billion. 0 C) $600 billion. 0 D) $400 billion. Aggregate demand will DECREASE if: Q A) the aggregate price level falls. 0 3) productivity declines. O C) the government raises tax rates. 0 D) the money supply increases. An inflationary gap: 0 A) means that there are pressures for wages to fall. 0 3) means that $RA$wil| soon shift rightward. O C) means that the economy is operating beyond its potential output. 0 D) is generally regarded as desirable, especially by people living on a fixed Income. Figure: AD-AS 332:: Y: Yr V1 Real GOP Reference: Ref 12-15 (Figure: ADAS) Look at the figure ADAS. Assume that the economy is in long-run equilibrium. If the Federal Reserve lowers the key interest rate: Q A) the aggregate demand curve will stay unchanged at A01. 0 B) there will be a downward movement along the aggregate demand curve A01. 0 C) the aggregate demand curve will shift to A03. 0 D) the aggregate demand curve will shift to A02. Aggregate price level Reference: Ref 13-6 (Figure: Fiscal Policy ll) Look at the figure Fiscal Policy ||. Suppose that this economy is in equilibrium at E1. If there is a decrease in government transfers, _____ will shift to the , causing a(n) _____ in the price level and a(n) _____ in real GDP. 0 A) A01; left; decrease; decrease O 3) A02; left; decrease; decrease O C) A01; right; increase; increase 0 D) A02; left; increase; decrease The Fisher effect states that: O A) the expected real rate of interest increases by one percentage point for each percentage change in expected inflation. O B) the nominal rate of interest is unaffected by the change in expected inflation. O C) the nominal rate of interest is unaffected by the change in unexpected inflation. O D) the expected real rate of interest is unaffected by the change in expected inflation