Question 1(Multiple Choice Worth 5 points) (03.06 MC) What would happen to output, employment, and the price level if the government increased spending on infrastructure, ceteris paribus? 0 Output would decrease, employment would decrease, and the price level would decrease. 0 Output would decrease, employment would decrease, and the price level would increase. 0 Output would decrease, employment would increase, and the price level would increase. 0 Output would increase, employment would increase, and the price level would decrease. 0 Output would increase, employment would increase, and the price level would increase. [Q Question 2(Multiple Choice Worth 5 points) (03.06 MC) Which of the following could occur with cost-push inflation? O An output decrease, employment decrease, and price level decrease O An output decrease, employment decrease, and price level increase O An output decrease, employment increase, and price level increase O An output increase, employment increase, and price level decrease An output increase, employment increase, and price level increaseQuestion 3(Multiple Choice Worth 5 points) (03.06 MC) Which of the following could initiate ination? O A decrease in short-run aggregate supply or a decrease in aggregate demand 0 An increase in short-run aggregate supply or a decrease in aggregate demand 0 A decrease in short-run aggregate supply or an increase in aggregate demand 0 An increase in short-run aggregate supply or an increase in aggregate demand 0 Only an increase in the long-run aggregate supply [[2] Use the graph to answer the question that follows. LRAS SRAS, Price Level SRAS, PL, PL, AD Real GDP Which of the following statements is a valid explanation of the change shown in the graph? An economy experiences a positive supply shock, leading to short-run deflation. An economy experiences a negative supply shock, leading to short-run inflation. O An economy experiences a negative demand shock, leading to short-run deflation. An economy experiences a positive supply shock, leading to short-run inflation. An economy experiences a positive demand shock, leading to short-run deflation.Question 5(Multiple Choice Worth 5 points) (03.06 MC) Assume the price level is increasing, real GDP is decreasing, and the unemployment rate is increasing. Which event would explain this macroeconomic situation? O A positive supply shock O A negative supply shock A positive demand shock O A negative demand shock O Insufficient dataQuestion 1(Multiple Choice Worth 5 points) (03.08 MC) Which of the following statements about fiscal policy is accurate? O The tax multiplier has a greater impact than the spending multiplier. Government spending has a direct impact on short-run aggregate supply. O It will decrease the inflation rate. O It can only be used to correct a recessionary gap. O There is a time lag between discretionary spending and its impact. O DistractorPrice Level PL\" $400 $640 Real GDP (Billions) Assume a marginal propensity to consume of 0.75. Which of the following scal policies could correct the economic situation above? 0 Decreasing taxes by $60 billion 0 Increasing taxes by $80 billion 0 Increasing spending by $60 billion 0 Decreasing spending by $80 billion 0 Increasing spending by $240 billion Question 3(Multiple Choice Worth 5 points) (03.08 MC) What will be impact of an income tax increase on an economy's consumption spending, real output, and unemployment in the short run? 0 Consumption will decrease, real output will decrease, and unemployment will increase. 0 Consumption will increase, real output will increase, and unemployment will decrease. 0 Consumption will increase, real output will decrease, and unemployment will increase. 0 Consumption will increase, real output will increase, and unemployment will decrease. 0 Consumption will decrease, real output will decrease, and unemployment will decrease. [C3 Question 4(Multiple Choice Worth 5 points) (03.08 LC) Which of the following would be an expansionary scal policy? 0 Placing a limit on government expenditures 0 Raising the income tax rate 0 Increasing the corporate tax rate 0 An increase in infrastructure spending 0 A decrease in defense spending [C] Question 5(Multiple Choice Worth 5 points) (03.08 MC) What would be the net effect of the government increasing the taxes by $10 billion at the same time that it decreased spending by $5 billion? Assume a marginal propensity to save of 0.1. O Decreasing aggregate demand by $40 billion 0 Decreasing aggregate demand by $140 billion 0 Increasing aggregate demand by $40 billion 0 Increasing aggregate demand by $140 billion 0 The impact on aggregate demand is indeterminate. IE2] Question 1(Multiple Choice Worth 5 points) (03.09 MC) Which of the following statements about a progressive income tax structure is accurate? 0 It is the least effective type of automatic stabilizer. O The less a person earns, the greater their tax burden. O The more a person earns, the greater their tax burden. OA person can end up making less after taxes after an income increase. 0 It has the tendency to worsen recessionary and inflationary cycles. [C3 Question 2(Multiple Choice Worth 5 points) (03.09 LC) Which of the following is an example of an automatic stabilizer? O Discretionary spending O A new tax law O The multiplier effect O Time lag O Unemployment benefitsQuestion 3(Multiple Choice Worth 5 points) (03.09 MC) As GDP increases, tax revenue and the unemployment rate generally O decreases; decreases O increases; increases O decreases; increases O increases; decreases O increases; stays the sameQuestion 4(Multiple Choice Worth 5 points) (03.09 MC) Which of the following accurately describes the relationship between social service programs and the business cycle? 0 Social service programs act completely independently of the business cycle, 0 Social service programs can help with recessions but do not slow ination. 0 Social service programs can help with inflation but do not alleviate recessions. 0 Social service programs tend to intensify recessions and inflationary periods. 0 Social service programs help alleviate cyclical unemployment and ination. [C1 Question 5(Multiple Choice Worth 5 points) (0309 MC) Increasing tax revenues and falling transfer payments are an automatic response to O longterm economic growth 0 an inflationary period 0 a recessionary period 0 price level disequilibrium 0 an aggregate demand decrease [EU