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Lecture

Ch 14 15 tutorial questions.pdf

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Department
Economics
Course
ECON 1BB3
Professor
Bridget O' Shaughnessy
Semester
Fall

Description
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 consistentwith 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 theexpected 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 curveto 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 MPCis 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
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