Which of the following is not a source of costpush inflation?

1.an increase in the level of government spending for social programs

2. an increase in the minimum wage

3. higher crop prices caused by a drought

4.firms being forced by unions to pay wage increases in excess of productivity gains

If the MPS is 0.25, an $80 billion increase in government spending (G=80) would cause equilibrium output (Y=?) to increase by

1.$60 billion.

2.$140 billion.

3. $320 billion

4. $400 billion.

What will happen to prices and unemployment, when the government increases money supply, that is, if the Federal reserve bank loosens (raises) money supply?

1.Prices increase, unemployment increases

2. Prices increase, unemployment decreases

3.Prices decrease, unemployment increases

4.Prices decrease, unemployment decreases

What will happen to prices and unemployment if there is a large increase in technology, that expands productivity in the country?

1.Prices increase, unemployment increases

2.Prices increase, unemployment decreases

3.Prices decrease, unemployment increases

4.Prices decrease, unemployment decreases

What will happen to prices and unemployment if there is a depreciation of the exchange rate, which causes the aggregate demand curve to shift to the right?

1.Prices increase, unemployment increases

2. Prices increase, unemployment decreases

3. Prices decrease, unemployment increases

4.Prices decrease, unemployment decreases

From the table below, the MPS is

A.0.10

B.0.20

C.0.25

D.0.75

E. 0.80

PRICE LEVEL 250 Long-Run Aggregate Supply FIGURE 1 200 Assume the economy is currently in short-run equilibrium, as shown by the intersection of the Aggregate Demand and Aggregate Short-Run Aggregate Supply Supply curve. Say, full employment is given 150 at 6 trillion dollars, which is shown by the vertical line that says Long-Run Aggregate Supply. 100 50 Aggregate Demand 0 2 4 6 8 10 QUANTITY OF OUTPUT (Trillions of dollars)