True and False 1. Among the reasons firms find it profitable to expand output in

Question

True and False 1. Among the reasons firms find it profitable to expand output in the short run when the price level is rising faster than expected is that prices for firms' output are rising with the price level. 2. If disposable income increases, consumption spending decreases. 3.If incomes in the United States increase, other things equal, then U.S. exports increase and imports decrease. 4.If the actual price level exceeds the expected price level reflected in long-term contracts, firms will find production less profitable than they had expected and will increase the quantity of output supplied. 5. Purchases of existing commodities, such as gold and precious gems, are considered investment spending by economists. 6.The larger the marginal propensity to save, other things constant, the smaller the multiplier 7.The slope of the consumption function equals the marginal propensity to consume. 8.Wage rates are typically flexible upward but "sticky" downward. 9.As a contractionary gap is closed in the long run, output increases and the price level decreases. 10. Increases in the costs of producing each level of output will cause a rightward shift of the short-run aggregate supply curve.

Explanation / Answer

1)True 2)False 3)True 4)False 5)False 6)True 7)True 8)True 9)True 10)False

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