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Lecture

# ECON 1BB3 Lecture Notes - Aggregate Supply, Aggregate Demand, Autarky

2 pages78 viewsFall 2013

Department
Economics
Course Code
ECON 1BB3
Professor
Bridget O' Shaughnessy

Page:
of 2
Chapter 14-15 Tutorial Quiz
1. Which of the following happens to aggregate demand if people want to save
more for retirement and the government raises taxes?
a.
Aggregate demand shifts right.
b.
Aggregate demand shifts left.
c.
If people save more, aggregate demand shifts right; f the government
raises taxes, aggregate demand shifts left.
d.
If people save more, aggregate demand shifts left; if the government
raises taxes, aggregate demand shifts right.
2. Which of the following is consistent with the theory of aggregate supply?
a.
An increase in the expected price level shifts the short-run aggregate
supply curve to the right, and an increase in the actual price level
shifts the short-run aggregate supply to the right.
b.
An increase in the expected price level shifts the short-run aggregate
supply curve to the right, and an increase in the actual price level does
not shift the short-run aggregate supply.
c.
An increase in the expected price level shifts the short-run aggregate
supply curve to the left, and an increase in the actual price level shifts
the short-run aggregate supply to the left.
d.
An increase in the expected price level shifts the short-run aggregate
supply curve to the left, and an increase in the actual price level does
not shift the short-run aggregate supply.
3. Assume that the MPC is 0.75. Assume that there is a multiplier effect and that the
total crowding-out effect is \$3 billion. How will a decrease in government
purchases of \$10 billion shift aggregate demand?
a.
It will shift aggregate demand left by \$7 billion.
b.
It will shift aggregate demand left by \$37 billion.
c.
It will shift aggregate demand left by \$43 billion.
d.
It will shift aggregate demand right by \$7 billion.
Figure 14-1
4. Refer to Figure 14-1. How would an increase in the money supply of a closed
economy move the economy in the short and long run?
a.
From C to B in the short run and the long run.
b.
From C to D in the short run and the long run.
c.
From C to B in the short run and to A in the long run.
d.
From C to D in the short run and to C in the long run.
5. In a small open economy with a flexible exchange rate, which of the following
effects will a contractionary fiscal policy have?
a.
It will cause the Canadian interest rate to fall below the world interest
rate for a short period of time, which in turn will cause the dollar to
depreciate and net exports to increase.
b.
It will cause the Canadian interest rate to rise above the world
interest rate for a short period of time, which in turn will cause the
dollar to appreciate and net exports to decrease.
c.
It will cause the Canadian interest rate to fall below the world interest
rate for a short period of time, which in turn will cause the dollar to
appreciate and net exports to decrease.
d.
It will cause the Canadian interest rate to rise above the world
interest rate for a short period of time, which in turn will cause the
dollar to depreciate and net exports to increase.

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