Please, I have difficulties with the following questions and I really need answers Thank you very much 1) In short run equilibrium, the quantities supplied and demanded of Real GDP can be less than or greater than Natural Real GDP True False 2) Suppose the following (1) the wage rate rises, (2) the interest rate rises, (3) any change in AD is greater than any change in SRAS Based on this information, in the short run Real GDP will and the price level will Fall fall Fall rise Rise rise Rise fall 3) Which of the following best describes how the real balance effect works a The price level falls, purchasing power rises, a person's monetary wealth rises, and the person buys fewer goods and services b The price level rises, purchasing power rises, a person's monetary wealth decreases, and the person buys more goods and services c The price level rises, purchasing power falls, a person's monetary wealth falls, and the person buys fewer goods and services d The price level falls, purchasing power rises, a person's monetary wealth falls, and the person buys fewer goods and services e none of the above 4) Which set of changes is predicted to lower Real GDP in the short run a Interest rates rise and wage rates fall b Interest rates rise and there is a beneficial supply shock c Interest rates rise and labor productivity increases d Interest rates rise and individuals expect lower (future) incomes e c and d 5) Explain (with your own words) why the short run aggregate supply curve (SRAS) is upward sloping, while the long run aggregate supply (LRAS) curve is a vertical line 6) Assume that the economy is currently in short run equilibrium, then the dollar appreciates in the foreign exchange market Describe (with your own words) the correct sequence of events that happen as the economy adjusts to a new short run equilibrium (be sure to state what the impact would be on the price level and Real GDP) 7) Suppose that at a given price level the following values exist in a hypothetical economy Consumption $7,000 billion Investment $1,900 billion Government Purchases $1,700 billion Exports $300 billion Imports $300 billion Assume that the level of total expenditures is equal to the value of goods and services that suppliers want to sell Refer to Exhibit 9 8 If saving increases by $500 billion, the new level of consumption will equal Accordingto classical economists investment would and total expenditures would a $6,500 billion then decrease by $500 billion fall by $500 billion b $6,500 billion then increase by $500 billion remain constant c $7,500 billion remain constant fall by $500 billion d $6,500 billion then increase by $500 billion fall by $500 billion 8) If the natural unemployment rate is 5 percent and the current unemployment rate is 6 percent, then the economy is a producing a level of Real GDP that is greater than the level of natural Real GDP b in an inflationary gap c producing a level of Real GDP that is less than the level of natural Real GDP d a and b e b and c 9) When the economy is in a recessionary gap, the labor market is experiencing a In a self regulating economy, wage rates will then and the curve will shift a shortage fall SRAS rightward b surplus fall SRAS rightward c surplus rise AD rightward d shortage rise AD rightward e shortage fall SRAS leftward 10) Which of the following equations is correct a Saving Disposable income x Consumption b Saving Disposable income Consumption c Disposable income Consumption Saving d Saving Disposable income Consumption 11) Describe (with your own words) how Say's law can hold in a money economy, according to the classical economists 12) Using the aggregate demand and aggregate supply (AD SRAS) framework, explain (with your own words) how a large scale natural disaster would be expected to impact the economy Discuss how an economist who believes the economy is self regulating would view the longer term impact of such a disaster, and whether they would advocate the need for government intervention 13) The marginal propensity to consume plus the marginal propensity to save is always a equal to zero b equal to one c greater than one d greater than zero but less than one 14) Idle resources must exist in the economy in order for the multiplier process to lead to an increase in Real GDP True False 15) The closer the aggregate supply curve is to being horizontal, the a greater the resulting change in Real GDP for a given change in autonomous spending b smaller the resulting change in Real GDP for a given change in autonomous spending c larger the multiplier d smaller the multiplier 16) If an economy consumes 68 percent of any increase in disposable income, then an increase in autonomous investment of $1 billion would result in an increase in total spending of as much as a $5 0 billion b $3 125 billion c $6 8 billion d $1 47 billion e $1 125 billion 17) The economy is in equilibrium, TP TE, and Real GDP is $2,000 billion The MPC is 0 75, the multiplier is operative, and idle resources exist at each expenditure round Autonomous investment spending falls by $10 billion As a result, the TE curve shifts , inventory levels unexpectedly , business firms the quantity of goods and services they produce, and Real GDP by a downward fall increase rises $40 billion b downward rise decrease falls $7 5 billion c downward fall decrease falls $7 5 billion d downward rise decrease falls $40 billion e upward rise decrease falls $40 billion 18) Explain (with your own words) the process by which an initial change in autonomous spending can lead to an even greater change in total spending 19) Explain (with your own words) how the Keynesian view differs from the classical view with respect to saving Explain further how the two views differ with respect to investment

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Please, I have difficulties with the following questions and I really need answers. Thank you very much. 1) In short-run equilibrium, the quantities supplied and

Please, I have difficulties with the following questions and I really need answers. Thank you very much.

1) In short-run equilibrium, the quantities supplied and demanded of Real GDP can be less than or greater than Natural Real GDP.

True
False

2) Suppose the following: (1) the wage rate rises, (2) the interest rate rises, (3) any change in AD is greater than any change in SRAS. Based on this information, in the short run Real GDP will __________ and the price level will __________.

Fall; fall
Fall; rise
Rise; rise
Rise; fall

3) Which of the following best describes how the real balance effect works?

a. The price level falls, purchasing power rises, a person's monetary wealth rises, and the person buys fewer goods and services.

b. The price level rises, purchasing power rises, a person's monetary wealth decreases, and the person buys more goods and services.

c. The price level rises, purchasing power falls, a person's monetary wealth falls, and the person buys fewer goods and services.

d. The price level falls, purchasing power rises, a person's monetary wealth falls, and the person buys fewer goods and services.

e. none of the above

4) Which set of changes is predicted to lower Real GDP in the short run?

	a.	Interest rates rise and wage rates fall.
	b.	Interest rates rise and there is a beneficial supply shock.
	c.	Interest rates rise and labor productivity increases.
	d.	Interest rates rise and individuals expect lower (future) incomes.
	e.	c and d

5) Explain (with your own words) why the short-run aggregate supply curve (SRAS) is upward sloping, while the long-run aggregate supply (LRAS) curve is a vertical line.

6) Assume that the economy is currently in short-run equilibrium, then the dollar appreciates in the foreign exchange market. Describe (with your own words) the correct sequence of events that happen as the economy adjusts to a new short-run equilibrium (be sure to state what the impact would be on the price level and Real GDP).

7) Suppose that at a given price level the following values exist in a hypothetical economy:

Consumption = $7,000 billion Investment = $1,900 billion Government Purchases = $1,700 billion Exports = $300 billion Imports = $300 billion

Assume that the level of total expenditures is equal to the value of goods and services that suppliers want to sell.

Refer to Exhibit 9-8.If saving increases by $500 billion, the new level of consumption will equal______________.Accordingto classical economists investment would _______________ and total expenditures would ________________________.

	a.	$6,500 billion; then decrease by $500 billion; fall by $500 billion
	b.	$6,500 billion; then increase by $500 billion; remain constant
	c.	$7,500 billion; remain constant; fall by $500 billion
	d.	$6,500 billion; then increase by $500 billion; fall by $500 billion

8)_If the natural unemployment rate is 5 percent and the current unemployment rate is 6 percent, then the economy is

	a.	producing a level of Real GDP that is greater than the level of natural Real GDP.
	b.	in an inflationary gap.
	c.	producing a level of Real GDP that is less than the level of natural Real GDP.
	d.	a and b
	e.	b and c

9) When the economy is in a recessionary gap, the labor market is experiencing a _____________.In a self-regulating economy, wage rates will then ___________ and the ______________ curve will shift __________________.

	a.	shortage; fall; SRAS; rightward
	b.	surplus; fall; SRAS; rightward
	c.	surplus; rise; AD; rightward
	d.	shortage; rise; AD; rightward
	e.	shortage; fall; SRAS; leftward

10) Which of the following equations is correct?

	a.	Saving = Disposable income x Consumption
	b.	Saving = Disposable income - Consumption
	c.	Disposable income = Consumption - Saving
	d.	Saving = Disposable income + Consumption

11) Describe (with your own words) how Say's law can hold in a money economy, according to the classical economists.

12) Using the aggregate demand and aggregate supply (AD-SRAS) framework, explain (with your own words) how a large-scale natural disaster would be expected to impact the economy. Discuss how an economist who believes the economy is self-regulating would view the longer term impact of such a disaster, and whether they would advocate the need for government intervention.

13) The marginal propensity to consume plus the marginal propensity to save is always

a. equal to zero.

b. equal to one.

c. greater than one.

d. greater than zero but less than one.

14) Idle resources must exist in the economy in order for the multiplier process to lead to an increase in Real GDP.

True
False

15) The closer the aggregate supply curve is to being horizontal, the

	a.	greater the resulting change in Real GDP for a given change in autonomous spending.
	b.	smaller the resulting change in Real GDP for a given change in autonomous spending.
	c.	larger the multiplier.
	d.	smaller the multiplier.

16) If an economy consumes 68 percent of any increase in disposable income, then an increase in autonomous investment of $1 billion would result in an increase in total spending of as much as

	a.	$5.0 billion.
	b.	$3.125 billion.
	c.	$6.8 billion.
	d.	$1.47 billion.
	e.	$1.125 billion.

17) The economy is in equilibrium, TP = TE, and Real GDP is $2,000 billion. The MPC is 0.75, the multiplier is operative, and idle resources exist at each expenditure round. Autonomous investment spending falls by $10 billion. As a result, the TE curve shifts __________, inventory levels unexpectedly __________, business firms __________ the quantity of goods and services they produce, and Real GDP __________ by __________.

	a.	downward; fall; increase; rises; $40 billion
	b.	downward; rise; decrease; falls; $7.5 billion
	c.	downward; fall; decrease; falls; $7.5 billion
	d.	downward; rise; decrease; falls; $40 billion
	e.	upward; rise; decrease; falls; $40 billion

18) Explain (with your own words) the process by which an initial change in autonomous spending can lead to an even greater change in total spending.

19) Explain (with your own words) how the Keynesian view differs from the classical view with respect to saving.Explain further how the two views differ with respect to investment.