part 1

An increase in household saving causes consumption to

• • A. fall and aggregate demand to increase.

• • B. fall and aggregate demand to decrease.

• • C. rise and aggregate demand to increase.

• • D. rise and aggregate demand to decrease

In the short run an increase in the costs of production makes

• • A. both output and prices rise.

• • B. output fall and prices rise.

• • C. both output and prices fall.

• • D. output rise and prices fall.

Recessions come at

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

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

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

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

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

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

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

When the Fed buys bonds the supply of money

• • A. increases and so aggregate demand shifts right.

• • B. increases and so aggregate demand shifts left.

• • C. decreases and so aggregate demand shifts left.

• • D. decreases and so aggregate demand shifts right.

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

• • A. neither net exports nor investment.

• • B. both net exports and investment.

• • C. net exports but not investment.

• • D. investment but not net exports.

Suppose that political instability in other countries makes people fear for the value of their assets in these countries so that they desire to purchase more U.S assets. What would happen to the dollar?

• • A. It would appreciate in foreign exchange markets making U.S. goods less expensive compared to foreign goods.

• • B. It would depreciate in foreign exchange markets making U.S. goods more expensive compared to foreign goods.

• • C. It would depreciate in foreign exchange markets making U.S. goods less expensive compared to foreign goods.

• • D. It would appreciate in foreign exchange markets making U.S. goods more expensive compared to foreign goods.

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

• • A. fewer foreign bonds. The real exchange rate rises.

• • B. fewer foreign bonds. The real exchange rate falls.

• • C. more foreign bonds. The real exchange rate falls.

• • D. more foreign bonds. The real exchange rate rises

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

• • A. demand left.

• • B. supply right.

• • C. supply left.

• • D. demand right.

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

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

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

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

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

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

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

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

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

Aggregate demand includes

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

• • B. 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.

• • C. 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.

• • D. 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.