1- Which of the following will occur when an economy’s price level increases?
a-Aggregate demand will increase.
b-The purchasing power of money will increase.
c-The purchasing power of money will decrease.
d-The real value of wealth will increase.
2-Which of the following is NOT an explanation for the shape of the aggregate demand curve?
a-real balance effect
b-interest rate effect
c-open economy effect
3-Steadily improving improvements in technology, other things being equal, will result in
a-no change in the price level and steadily increasing output.
c-steadily rising price level (inflation) and steadily increasing output.
d-a steadily falling price level with no change in output.
4- Say’s law states that
a-desired expenditures will equal actual expenditures.
b-people produce only the goods they want.
c-demand is always less than supply.
d-overproduction is never possible because of limited resources.
5-The marginal propensity to consume is
a-real consumption/real disposable income.
b-real saving/real disposable income.
c-change in real consumption/change in real disposable income.
d-change in real saving/change in real disposable income.