QUESTION 7 0.21428 points Save Answer Which of the following events would cause the aggregate demand curve to shift to the right, indicating an increase in aggregate demand? Consumers become more pessimistic about the future state of the economy. O Consumers become more optimistic about the future state of the economy. O The price level increases, causing consumers to spend less. O The price level decreases, causing consumers to spend more. QUESTION 8 0.21428 points Save Answer Fiscal policy is: Government decisions about the level of money supply and interest rate. Government decisions about the level of taxation and spending. Government policy about inequality and poverty. Government decisions about the level of taxation and money supply. QUESTION 9 0.21428 points Save Answer Fiscal policy most directly affects the economy by increasing or decreasing: O the money supply. O aggregate demand. long-run aggregate supply. O short-run aggregate supply. QUESTION 10 0.21428 points Save Answer One way fiscal policy affects aggregate demand is: O directly through taxation. O directly through tariffs. directly through government spending. All of these are true.0.21428 points Save Answer QUESTION 22 Use the potential output from one of the panels. How much is the equilibrium output at recessionary gap? Panel 2 Panel 1 Price level Price level LAS SAS 102 100 ADo ADo AD, $12 $10 Real GDP Real GDP Panel 3 Price level LAS SAS d 105 - AD2 ADo $13 Real GDP O $10 O $12 O $13 O $14QUESTION 1 0.21428 points Save Answer The aggregate demand curve: O shows the relationship between the overall price level and the level of total demand. O shows the price level on the horizontal axis and output on the vertical axis. O is upward-sloping, which is counter to the individual demand curve. O All of these are true. QUESTION 2 0.21428 points Save Answer The wealth/real balance/money effect says that an increase in the price level, would reduce the purchasing power of a given amount of wealth/income. would increase the level of real wealth. would increase the purchasing power of a given amount of wealth/income. would typically shift spending from consumption goods to investment. QUESTION 3 0.21428 points Save Answer Higher interest rates motivate: O individuals to spend more on capital goods. O individuals to spend more on consumption goods. O firms to invest less in new factories and working capital. O firms to invest more in new factories and working capital.QUESTION 18 0.21428 points Save Answer The long-run aggregate supply curve is: downward sloping O vertical. O horizontal. none of the above. QUESTION 19 0.21428 points Save Answer The long-run aggregate supply curve will shift to the right if: the economy experiences a supply shock. the economy loses productive capacity. O massive investment in country's education increase the supply of skilled of labor. The long-run aggregate supply curve is fixed, and does not move. QUESTION 20 0.21428 points Save Answer When the economy is producing at a quantity greater than its long-run aggregate supply: the economy is experiencing greater economic growth. it causes a bubble to form in one of its major sectors. economy is overheating and experiencing inflationary gap. It is not possible to produce beyond the long-run aggregate supply curve.QUESTION 15 0.21428 points Save Answer Sticky wages or sticky prices don't affect the long-run aggregate supply curve because: O the price level is constant in the long-run. O consumers tend to buy the same quantities over the long-run. ) wages and prices are renegotiated so that prices and wages are only sticky in the short-run, not in the long-run. minimum wage sets the long-run wages. QUESTION 16 0.21428 points Save Answer The long-run aggregate supply curve represents the level of output if the economy: has a zero inflation rate. O is operating at full capacity. is operating at an unemployment rate of zero. All of these are true. QUESTION 17 0.21428 points Save Answer A major technology breakthrough in the Airline industry in the United States providing high quality services to passengers with low costs is likely to lead to a short-run demand shock. short-run supply shock. long-run demand shock. long-run supply shock.QUESTION 11 0.21428 points Save Answer Which of the following is an example of contractionary fiscal policy? increase in government spending. increase in government tax rate. increase in Federal income tax rate. increase in interest rate. QUESTION 12 0.21428 points Save Answer Aggregate supply is the: O market value of the total quantity of goods and services demanded in the economy. O market value of the total quantity of goods and services supplied in the economy. total quantity of the production of all the households in the economy. O total quantity of goods and services demanded in the economy. QUESTION 13 0.21428 points Save Answer Aggregate supply curve that slopes upward must be: O a short-run curve. an individual industry's supply curve. a long-run curve. an individual firm's supply curve. QUESTION 14 0.21428 points Save Answer Sticky wages occur because: O wages can only be changed at the end of contracts, as opposed to final good prices which can change anytime. employers must wait until the current contract ends to cut someone's pay. O unions often negotiate wages for several years in advance. All of these are true.In the panels below, LAS is the long-run supply curve, SAS, the short-run supply curve, ADo. AD1, AD2, the three aggregate demand curves, a, b, c are three equilibria states of the economy with the same potential output. How much is the full-employment or potential output in the panels? Panel 2 Panel 1 Price level Price level LAS LAS SAS SAS c 102 100 AD ADo AD, $12 $10 Real GDP Real GDP Panel 3 Price level LAS SAS d 105 - AD 2 ADo $13 Real GDP O $10 O $12 O $13 O $140.21428 points Save Answer QUESTION 24 Refer to panel 1. What type of discretionary fiscal policy government should conduct? Panel 2 Panel 1 Price level Price level LAS SAS SAS 100 AD ADo AD $12 Real GDP $10 Real GDP Panel 3 Price level 105 AD- $13 Real GDP Expansionary fiscal policy. Contractionary fiscal policy.QUESTION 23 0.21428 points Save Answer Use the potential output from one of the panels. How much is the recessionary gap? Panel 2 Panel 1 Price level Price level 102 100 ADo $12 $10 Real GDP Real GDP Panel 3 Price level LAS SAS d 105 AD 2 ADo $13 Real GDP O $1 O $2 O-$1 O $10QUESTION 25 0.21428 points Save Answer To get the economy out of a recessionary gap, if government increases spending, which of the following channel would show the effect of spending increase on the economy. Spending increase =higher deficit = tax increases = people save more = aggregate demand increases = economy expands Spending increase =higher income= households and businesses increase spending = aggregate demand increases = economy expands Spending increase =higher income= households and businesses increase savings = aggregate demand increases = economy expands QUESTION 26 0.21428 points Save Answer An indirect cost of government debt is: it can cause hyperinflation. O national debt can crowd out private investment. national debt can put burden on the future generation. O national debt can lead to both choices 2 and 3. QUESTION 27 0.21428 points Save Answer Which of the following expression calculate the budget deficit? Budget deficit = Taxes + government spending 0 O Budget deficit = Taxes - government spending 0 QUESTION 28 0.21428 points Save Answer The Office of Management and Budget estimates that for fiscal year 2018, U.S. tax revenue will be $3340 billions while the planning spending estimated at $4173 billions. Then, the estimated budget deficit is equal to $7513 millions. O -$7513 millions. . O $833 millions. O -$833 millions.0.21428 points Save Answer QUESTION 4 If consumption is $75 billion, investments is $25 billion, government purchases are $10 billion, imports are $18 billion, and exports are $8 billion, economy's aggregate demand is equal to: O $100 billion. $146 billion. $136 billion. O $110 billion. 0.21428 points Save Answer QUESTION 5 If a country sells $12 billion worth of goods and services to the rest of the world while buying $14 billion from the rest of the world, the net export is equal to: O -$2 O $26 O $2 O -$26 0.21428 points Save Answer QUESTION 6 Which of the following would decrease (illustrated by shift to the left) economy's aggregate demand? Higher interest rates across the economy. Lower consumer confidence. Lower tax rate. Both choices 1 and 2