101. When we consider an upward sloping aggregate supply curve and a downward sl
ID: 1210830 • Letter: 1
Question
101. When we consider an upward sloping aggregate supply curve and a downward sloping aggregate demand curve, a decrease in aggregate expenditures is reflected as a A. Rightward shift in the aggregate supply curve, which increases both the equilibrium price level and equilibrium income B. Leftward shift in the aggregate demand curve, which decreases both the equilibrium price level and equilibrium income. C. Leftward shift in the aggregate supply curve, which increases the equilibrium price level and equilibrium income D. Rightward shift in the aggregate demand curve, which increases both the equilibrium price level and equilibrium income E. Leftward shift in the aggregate demand curve, which increases both the equilibrium price level and decreases equilibrium income.
103. When aggregate demand increases, all of the following result EXCEPT: A. The price level increases B. Cost push inflation results C. Unemployment decreases D. Equilibrium level of real GDP increases E. None-all of these result when aggregate demand increases
104. A major benefit of automatic stabilizers is that they A. Have the tendency to reduce the national debt B. Moderate the effect of fluctuations in the business cycle C. Guarantee a balanced budget over the course of the business cycle D. Require legislative review by congress before they can be implemented E. Help increase recessionary gaps in the economy
112. If you work for someone today but do not receive your paycheck until a month later, money is used as a A. Unit of account B. Store of value C. Standard of deferred payment D. Medium of exchange E. Wage liability
116. Which of the following is NOT an asset of a depository institution? A. Savings deposits B. Securities C. Cash D. Bank loans E. Reserves
119. When the foreign exchange value of the dollar is above its equilibrium rate, the U.S dollar has a tendency to A. Be revalued B. Be inflated C. Depreciate D. Be devalued E. Appreciate
101. When we consider an upward sloping aggregate supply curve and a downward sloping aggregate demand curve, a decrease in aggregate expenditures is reflected as a A. Rightward shift in the aggregate supply curve, which increases both the equilibrium price level and equilibrium income B. Leftward shift in the aggregate demand curve, which decreases both the equilibrium price level and equilibrium income. C. Leftward shift in the aggregate supply curve, which increases the equilibrium price level and equilibrium income D. Rightward shift in the aggregate demand curve, which increases both the equilibrium price level and equilibrium income E. Leftward shift in the aggregate demand curve, which increases both the equilibrium price level and decreases equilibrium income.
103. When aggregate demand increases, all of the following result EXCEPT: A. The price level increases B. Cost push inflation results C. Unemployment decreases D. Equilibrium level of real GDP increases E. None-all of these result when aggregate demand increases
104. A major benefit of automatic stabilizers is that they A. Have the tendency to reduce the national debt B. Moderate the effect of fluctuations in the business cycle C. Guarantee a balanced budget over the course of the business cycle D. Require legislative review by congress before they can be implemented E. Help increase recessionary gaps in the economy
112. If you work for someone today but do not receive your paycheck until a month later, money is used as a A. Unit of account B. Store of value C. Standard of deferred payment D. Medium of exchange E. Wage liability
116. Which of the following is NOT an asset of a depository institution? A. Savings deposits B. Securities C. Cash D. Bank loans E. Reserves
119. When the foreign exchange value of the dollar is above its equilibrium rate, the U.S dollar has a tendency to A. Be revalued B. Be inflated C. Depreciate D. Be devalued E. Appreciate
101. When we consider an upward sloping aggregate supply curve and a downward sloping aggregate demand curve, a decrease in aggregate expenditures is reflected as a A. Rightward shift in the aggregate supply curve, which increases both the equilibrium price level and equilibrium income B. Leftward shift in the aggregate demand curve, which decreases both the equilibrium price level and equilibrium income. C. Leftward shift in the aggregate supply curve, which increases the equilibrium price level and equilibrium income D. Rightward shift in the aggregate demand curve, which increases both the equilibrium price level and equilibrium income E. Leftward shift in the aggregate demand curve, which increases both the equilibrium price level and decreases equilibrium income.
103. When aggregate demand increases, all of the following result EXCEPT: A. The price level increases B. Cost push inflation results C. Unemployment decreases D. Equilibrium level of real GDP increases E. None-all of these result when aggregate demand increases
104. A major benefit of automatic stabilizers is that they A. Have the tendency to reduce the national debt B. Moderate the effect of fluctuations in the business cycle C. Guarantee a balanced budget over the course of the business cycle D. Require legislative review by congress before they can be implemented E. Help increase recessionary gaps in the economy
112. If you work for someone today but do not receive your paycheck until a month later, money is used as a A. Unit of account B. Store of value C. Standard of deferred payment D. Medium of exchange E. Wage liability
116. Which of the following is NOT an asset of a depository institution? A. Savings deposits B. Securities C. Cash D. Bank loans E. Reserves
119. When the foreign exchange value of the dollar is above its equilibrium rate, the U.S dollar has a tendency to A. Be revalued B. Be inflated C. Depreciate D. Be devalued E. Appreciate 101. When we consider an upward sloping aggregate supply curve and a downward sloping aggregate demand curve, a decrease in aggregate expenditures is reflected as a A. Rightward shift in the aggregate supply curve, which increases both the equilibrium price level and equilibrium income B. Leftward shift in the aggregate demand curve, which decreases both the equilibrium price level and equilibrium income. C. Leftward shift in the aggregate supply curve, which increases the equilibrium price level and equilibrium income D. Rightward shift in the aggregate demand curve, which increases both the equilibrium price level and equilibrium income E. Leftward shift in the aggregate demand curve, which increases both the equilibrium price level and decreases equilibrium income.
103. When aggregate demand increases, all of the following result EXCEPT: A. The price level increases B. Cost push inflation results C. Unemployment decreases D. Equilibrium level of real GDP increases E. None-all of these result when aggregate demand increases
104. A major benefit of automatic stabilizers is that they A. Have the tendency to reduce the national debt B. Moderate the effect of fluctuations in the business cycle C. Guarantee a balanced budget over the course of the business cycle D. Require legislative review by congress before they can be implemented E. Help increase recessionary gaps in the economy
112. If you work for someone today but do not receive your paycheck until a month later, money is used as a A. Unit of account B. Store of value C. Standard of deferred payment D. Medium of exchange E. Wage liability
116. Which of the following is NOT an asset of a depository institution? A. Savings deposits B. Securities C. Cash D. Bank loans E. Reserves
119. When the foreign exchange value of the dollar is above its equilibrium rate, the U.S dollar has a tendency to A. Be revalued B. Be inflated C. Depreciate D. Be devalued E. Appreciate
Explanation / Answer
101.
The aggregate expenditure of the economy is consumption plus government expenditure plus investment expenditure plus net export. The aggregate demand is the inverse relationship between price level and the real GDP. As price level falls the goods and services become cheaper and the people consume more. The aggregate expenditure curve shifts upward and real GDP increases. Thus as price level fall the real GDP increases.
Now if the autonomous part of aggregate expenditure decreases, this also causes the aggregate expenditure curve to shifts leftward. As the AE curve shifts the real GDP decreases. But as the price level remains the same this decrease imply a shift in the aggregate demand curve. Hence when the autonomous part of the AE curve decreases the AE curve and the demand curve both shifts leftward.
Given supply the decrease in demand moves the economy along the supply curve. Therefore, as demand falls both incone ans price level falls in the short run.
hence, the correct option is:
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102.
Inflation is the general increase in the allover price level. It is of two types: demand pull and cost push inflation. The demand pull inflation occurs due to increase in aggregate demand in the economy. Given the supply, a rise in demand will increase the price level and will cause inflation. The inflation that is caused by change in demand is called the demand pull inflation.
On the other hand, the cost push inflation occurs due to changes in supply. Given the demand, a fall in supply due to rising costs will increase the price level causing inflation. The inflation that is caused by change in supply is called the cost push inflation.
Therefore, when aggregate demand increases, the inflation that results is demand pull inflation. Hence the correct option is
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104.
The automatic stabilizers are fiscal policies that automatically stabilize the economy in time of economic swings. These policies are automatic in the sense that they do not need a legislative action to implement them. These policies increases government budget deficit in the time of recession and decreases it in the time of inflation. The example of such policies is unemployment compensation, the corporate profit tax, and progressive income tax.
The major advantage with these policies is that there is no time lag associated with the policies as they don’t need any legislative actions. These policies automatically increase or decrease government spending and government deficit to insert desired effect on the economy. For instance the unemployment benefit increases during recession due to increase in unemployment rate in the economy. This increases the government spending and deficit. The increase in government spending increases total spending and aggregate demand by multiplier effect. The economy is pushed into the recovery path automatically without implementing any further policies.
Therefore, the correct option is
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112.
In an econmy money serves four purposes: store of value, unit of account, medium of exchange and standard of deferred payment. Among these the standard of deferred payment refers to the purpose for which mony is used as future payment for current purchase. Therefore, if the employer pays latter for current work, the money is used as standard of deferred payment.
Therefore, the correct option is:
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116.
The balance sheet of a bank is the financial report that indicates the balance between a bank’s assets and its liabilities plus capital. The assets of a bank are the items of value that the bank owns, including loans. The liabilities of a bank are the financial obligation that the bank has to other people.
The savings deposits are bank’s liability; because the savings deposit held by the individual or firm at bank are demanded any time in form of cash and the bank is liable to pay.
Therefore, the correct option is:
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