Economics Quiz5.1

Recessions come at

• regular intervals. During recessions investment spending falls relatively more than consumption spending.

• regular intervals. During recessions consumption spending falls relatively more than investment spending.

• irregular intervals. During recessions investment spending falls relatively more than consumption spending.

• irregular intervals. During recessions consumption spending falls relatively more than investment spending.

When looking at a graph of aggregate demand, which of the following is correct?

• The variable on the vertical axis is nominal; the variable on the horizontal axis is real.

• The variable on the vertical axis is real; the variable on the horizontal axis is nominal.

• There are real variables on both the vertical and horizontal axes.

• There are nominal variables on both the vertical and the horizontal axes.

Aggregate demand includes

• the quantity of goods and services the government, households, firms, and customers abroad want to buy.

• neither the quantity of goods and services the government, households, nor firms want to buy nor the quantity of goods and services customers abroad want to buy.

• the quantity of goods and services households and firms want to buy, but not the quantity of goods and services the government wants to buy.

• the quantity of goods and services the government wants to buy, but not the quantity of goods and services households, firms, or customers abroad want to buy.

Other things the same, as the price level decreases it induces greater spending on

• neither net exports nor investment.

• both net exports and investment.

• net exports but not investment.

• investment but not net exports.

The effect of an increase in the price level on the aggregate-demand curve is represented by a

• shift to the left of the aggregate-demand curve.

• shift to the right of the aggregate-demand curve.

• movement to the right along a given aggregate-demand curve.

• movement to the left along a given aggregate-demand curve.

The wealth effect, interest-rate effect, and exchange-rate effect are all explanations for

• the slope of long-run aggregate supply.

• shifts in the aggregate-demand curve.

• the slope of the aggregate-demand curve.

• the slope of short-run aggregate supply.

Other things the same, if the U.S. price level falls, then U.S. residents want to buy

• fewer foreign bonds. The real exchange rate rises.

• fewer foreign bonds. The real exchange rate falls.

• more foreign bonds. The real exchange rate falls.

• more foreign bonds. The real exchange rate rises.

From 2001 to 2005 there was a dramatic rise in the value of houses. If this rise made homeowners feel wealthier, then it would have shifted aggregate

• supply left.

• supply right.

• demand left.

• demand right.

An increase in household saving causes consumption to

• fall and aggregate demand to increase.

• fall and aggregate demand to decrease.

• rise and aggregate demand to increase.

• rise and aggregate demand to decrease.

The initial impact of an increase in an investment tax credit is to shift aggregate

• demand left.

• supply right.

• supply left.

• demand right.