18. If consumers expect a shortage of consumer goods in the future, what will happen to output and price level?

18.

If consumers expect a shortage of consumer goods in the future, what will happen to output and price level? 

Output / Price Level

Increase / Increase

Increase / Decrease

Increase / No Change

Decrease / Increase

Decrease / Decrease

19.

If the economy was operating at P1Y1, then

the economy is at full employment of resources.

employment is less than full employment.

inflation is greater than 5%.

the economy is above full employment of resources.

the economy is in equilibrium.

20.

A change in aggregate demand from AD5 to AD6 will result in

an increase in output and no change in price level.

an increase in output and price level.

no change in output and an increase in price level.

a decrease in output and price level.

a decrease in output and no change in price level.

21.

A change in short-run aggregate supply from AS3 to AS1 can be caused by

a decrease in productivity.

a decrease in consumer wealth.

a decrease in the degree of excess capacity.

an increase in consumer confidence.

a decrease in business taxes.

22.

In order to counter the current recession, Congress increases welfare and unemployment transfers. What is the short-run impact of the government's actions on price level and output? 

Price Level / Output

Increase / Increase

Increase / Decrease

Decrease / Decrease

Decrease / Increase

No change / Increase

23.

If personal income increases,

aggregate demand will increase and shift left.

aggregate demand will decrease and shift left.

aggregate demand will increase and shift right.

aggregate demand will decrease and shift right.

there will be a movement along the aggregate demand curve.

24.

Assume the economy is operating at P2Yf. Which of the following would cause a shift to bring the economy to P1Y2?

Real wages fall.

Productivity increases.

Personal income taxes decrease.

Transfer payments decrease.

A major hurricane hits the southeastern United States.

25.

If real GDP is $150 billion, full employment GDP is $600 billion, and the marginal propensity to consume is 0.8, then Congress should

decrease taxes by $450 billion.

increase taxes by $112.5 billion.

decrease government purchases by $90 billion.

increase government purchases by $90 billion.

increase government purchases by $450 billion.

26.

Which of the following illustrates the most correct cause and effect chain for a decrease in taxes?

C increases, shifting AD to the right, increasing output and price level

C increases, shifting AD to the right, increasing output and decreasing price level

DI increases, increasing C, increasing output and price level

DI increases, increasing C, shifting AD to the right, increasing output and price level

DI increases, increasing C, shifting AD to the right, increasing output and decreasing price level

27.

Which of the following illustrates the most correct cause and effect chain for an increase in taxes?

C decreases, shifting AD to the right, decreasing output and price level

DI decreases, decreasing C, shifting AD to the left decreasing output and increasing price level

DI decreases, decreasing C, shifting AD to the left decreasing output and price level

DI decreases, decreasing C, shifting AD to the right, increasing output and price level

DI decreases, decreasing C, shifting AD to the right, decreasing output and increasing price level

28.

If Congress wants to close a recessionary gap, which policy is matched to the resultant change in output and price level? 

Policy / Price Level / Output

Decrease Spending / Increase / Increase

Decrease Taxes / Increase / Increase

Increase Spending / Decrease / Decrease

Increase Taxes / Decrease / Decrease

Increase Spending / Decrease / Increase

29.

Which of the following would cause an increase in economic growth?

An increase in the quality of human capital and a decrease in investment spending.

A decrease in the quantity of human capital and an increase in capital investment.

An increase in the real interest rate and an increase in investment spending.

An increase in labor productivity and an increase in capital investment.

An increase in spending on education and training and an increase in the real interest rate.

30.

Economic growth is most often measured by

a change in real GDP.

the stock market.

the standard of living in the nation.

the real GDP per capita.

the size of the working population.