QUIZ 2-YP 66C -MBA AS/AD & Multiplier Effect

Classical Economist are generally associated with

• laissez faire

• activist policy

• their support of low unemployment

• same as Keynesian Economist

Keynesian Economics focuses on

• long run

• short run

• both short run and long run

• neither short run nor long run

Expansionary monetary policy will likely

• shift the AD curve in to the left

• shift AD curve out to the right

• make the AD curve steeper

• make the AD curve flatter

If Government spending increases by 40 units, the AD curve will shift to the

• right by 40 units

• left by 40 units

• right by more than 40 units

• right by less than 40 units

If productivity rises by 2% and wages rise by 6%, the SAS curve will

• likely shift up

• likely shift down

• become flatter

• become steeper

Expansionary Fiscal Policy involves

• increasing taxes

• increasing the money supply

• increasing government spending

• changing the exchange ate

If the economy has an inflationary gap that it wants to eliminate, the government should use fiscal policy to shift

• LAS curve out

• AS curve down

• AD curve out to the right

• AD curve in to the left

If an economy has an inflationary gap and the government does nothing, the macropolicy model predicts that

• The SAS curve will shift up as input prices increase, and output will decline

• the SAS curve will shift down as input prices decline and output will rise

• the AD curve will sift out to the right as individuals collectively decide to increase expenditures and output will rise

• the AD curve will shift in to the left as individuals collectively decide to reduce expenditures and output will decline

if the mpe is 0.8, what is the size of the multiplier in the multiplier model

• 0.5

• 5

• 1

• 10

In the multiplier model, if autonomous expenditures are $5000 and the mpe equals to 0.9, what is the level of income in the economy?

• $5000

• $10,000

• $20,000

• $50,000