Three introductory questions, choose the simplest correct answer no explanation

Question

Three introductory questions, choose the simplest correct answer no explanation required 5 marks Price Level LRAS AS AD Real CDPlacome CY Bilions of Dollars 800 1150 1. In diagram above. The economy is currently operating at s800 billion. Suppose the federal government increases purchases. As a result, the: a. aggregate demand shifts right causing unemployment and real GDP to fall. b. c. aggregate demand shifts right causing unemployment to fall and real GDP to rise d. aggregate supply shifts left causing unemployment to rise and real GDP to fall. aggregate supply shifts right causing unemployment to rise and real GDP to rise. 2. Assume the US population is 300 million, 75 million are too young to work, 141 million are working and 9 million are unemployed and looking for work, what is the unemployment rate? a. 4% b, 6% c. 6.4% d, 12% 3. If the U.S. dollar appreciates in the forcign exchange market, U.S. exports will be and U.S. imports will be a. relatively less expensive; relatively less expensive b. relatively less expensive; relatively more expensive c. relatively more expensive; relatively less expensive d. relatively more expensive; relatively more expensive e. unaffected; relatively less expensive

Explanation / Answer

1) Option c is correct (AD shifts to the right, unemployment decreases and real GDP increases)

2) Unemployment rate = 100 x 9 /(141 + 9) = 6% (Option b)

3) Option c is correct

If the US dollar appreciates in the foreign exchange market, US exports will be relatively more expensive and US imports will be relatively less expensive.

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