Test 2 Chapter 7 7) If the classical models provided an accurate description of
ID: 1224506 • Letter: T
Question
Test 2
Chapter 7
7) If the classical models provided an accurate description of the workings of the economy during the Great Depression, then:
A) the Great Depression would have lasted much shorter.
B) the Great Depression would have lasted much longer.
C) the Great Depression would have been much deeper.
D) the Great Depression would have occurred exactly the way it did.
15) If the production function is Y = 3K, then an increase in capital (K) by 1 unit would
A) increase Y by 3 units.
B) decrease Y by 3 units.
C) increase Y by 0 units.
D) increase L by 3 units.
16) The production function is Y = 3KL. If there are 10 units of capital and 50 units of labor, aggregate output is:
A) 1500.
B) 500.
C) 3500.
D) 35010.
22) Please refer to Figure 7.1. Suppose the economy is at point A. An increase in the capital stock will:
A) move the economy to point B.
B) move the economy to point C.
C) move the economy to point D.
D) keep the economy at point A.
Chapter 8
19) Net investment is defined as
A) the total amount of investment made in the economy.
B) the gross investment made in the economy plus depreciation.
C) the gross investment made in the economy less depreciation.
D) the depreciation of the capital stock in the economy less gross investment.
23) Because of the principle of diminishing returns, growth promotion through capital deepening works better in countries that:
A) have a low capital stock.
B) have high capital stock.
C) have low saving rate.
D) have a high level of real GDP per capita.
26) In an open economy, the government can accelerate growth by:
A) taxing consumption and using the tax revenues for capital formation.
B) taxing investment and using the tax revenues for capital formation.
C) increasing government spending to finance additional consumption.
D) increasing the trade deficit and importing consumption goods.
28) If a country uses trade deficits to finance consumption, then the country will experience:
A) no capital deepening.
B) a smaller portion of GDP in the future used for capital deepening.
C) a decline in real GDP per capita in the future.
D) All of the above are correct.
6) Suppose that growth in output that can be attributed to growth in labor and capital is 3%. If output grows at a rate of 3%, it must be the case that:
A) labor is not becoming more productive.
B) growth in labor force exceeds growth in capital.
C) growth in capital exceeds growth in labor.
D) the economy is experiencing technological progress.
Chapter 9
33) Refer to Figure 9.2. Suppose the economy is at Point A, an increase in the price level causes a movement to Point:
A) E.
B) D.
C) C.
D) B.
39) In the consumption function C = Ca + bY, the term b represents: A) the multiplier effect.
B) the marginal propensity to consume.
C) the autonomous consumption spending.
D) the marginal propensity to save.
46) As the marginal propensity to consume decreases, the value of the multiplier
A) increases.
B) decreases.
C) stays the same.
D) can increase or decrease.
49) If the marginal propensity to consume is 0.2 and there is a $10 million increase in one component of spending, the aggregate demand curve will shift horizontally to the right by:
A) $8 million.
B) $12.5 million.
C) $15 million.
D) $2 million.
50) If the consumption function is C = 200 + 0.8Y and there is a $10 million increase in investment spending, then the aggregate demand curve will shift horizontally to the right by:
A) $50 million.
B) $8 million.
C) $12.5 million.
D) $2 million.
Chapter 10
22) Assume that the short-run AS is upward sloping. If the government chooses to increase government expenditure or to decrease taxes, according to the Aggregate Supply - Aggregate Demand model:
A) the price level will fall and GDP will increase.
B) the price level will rise and GDP will increase.
C) the price level will fall and GDP will decrease.
D) the price level will rise and GDP will decrease.
24) The basic idea of the fiscal multiplier is that an initial increase in government spending will have a:
A) more than a one-to-one impact on the budget deficit.
B) more than a one-to-one impact on long run aggregate supply.
C) more than a one-to-one impact on short run aggregate supply.
D) more than a one-to-one impact on aggregate demand.
26) Stabilization policies are policies designed:
A) to close the trade deficit.
B) to raise or lower interest rates.
C) to move the economy closer to full employment.
D) to close the budget deficit.
31) The length of time from when households receive tax rebate checks to the time they spend the checks is part of the:
A) inside lag.
B) outside lag.
C) identification lag.
D) inside-outside lag.
36) Refer to Figure 10.2 to answer the question below. Points A, B, and C correspond to a GDP level in Year 2. Suppose that in Year 1 the economy was projected to be at Pt. A by Year 2. Which of the following policies could bring the economy to Point C instead?
A) a correctly timed tax cut
B) an ill-timed tax cut
C) a correctly timed tax increase
D) an ill-timed tax increase
Explanation / Answer
7)
the Great Depression would have lasted much shorter.
because it was the fault of the traditional models which didn't led the economy to reach again at equilibrium demand levels needed for the economy to work fine.
please ask other questions again as we can only do one per post as per Chegg
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.