Documente Academic
Documente Profesional
Documente Cultură
Economy
Multiple Choice Questions
3) According to the real balance effect, a decrease in the overall price level will
A) decrease the quantity of real output demanded because households will feel poorer.
B) decrease the quantity of real output demanded because the value of savings accounts
and other financial assets will decline.
C) increase the quantity of real output demanded because cheaper products will be
substituted in the place of more expensive items.
D) increase the quantity of real output demanded because the purchasing power of
financial assets will increase.
E) increase the quantity of real output demanded because interest rates will tend to
decline, and this will stimulate spending.
Answer: D
6) According to the interest rate effect, an increase in the price level should
A) raise interest rates and increase spending on GDP; the aggregate demand curve should
shift to the right.
B) lower interest rates and decrease spending on GDP; the aggregate demand curve
should shift to the left.
C) raise interest rates and decrease spending on GDP; the aggregate demand curve should
shift to the right.
D) lower interest rates and increase spending on GDP; the aggregate demand curve
should be downward sloping.
E) raise interest rates and decrease spending on GDP; the aggregate demand curve should
be downward sloping.
Answer: E
7) Which of the following would tend to increase aggregate demand?
A) a reduction in the overall wealth of the society
B) pessimistic expectations about the future
C) a reduction in the money supply
D) a reduction in tax rates
E) a reduction in government spending
Answer: D