3.3 Short Run Aggregate Supply

Multiple Choice

Which of the following will cause an increase in aggregate demand?

• (A) An increase in the price level

• (B) A decrease in income taxes

• (C) An increase in the demand for money

• (D) A decrease in the supply of money

• (E) A decrease in government transfer payments

Multiple Choice

If Mr. Woodward's disposable income increases from $600 to $650 and her level of personal consumption expenditures increase from $480 to $520, you may conclude that her marginal propensity to

• consume is 0.8

• consume is 0.4

• save is 0.8

• save is 0.4

Multiple Choice

The use of government spending and revenue collection to influence the economy.

• Monetary Policy

• Fiscal Policy

• Congressional Policy

• Executive Policy

Multiple Choice

Assume that the nominal interest rate is 10 percent. If the expected inflation rate is 3 percent, the real interest rate is 

• 0.5% 
• 3% 
• 7%
• 10%

Multiple Choice

If the MPC is .80, the government spending multiplier is:

• 4

• 5

• 3

• 2

​