If productivity and wages both rise by 3 percent, then the price

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1. If productivity and wages both rise by 3 percent, then the price level will increase by 3%. (Points : 5)
True
False

2. A fall in the value of the dollar relative to other currencies will: (Points : 5)
increase demand for U.S. goods, shifting the U.S. aggregate demand curve to the right.
increase demand for U.S. goods, shifting the U.S. aggregate demand curve to the left.
decrease demand for U.S. goods, shifting the U.S. aggregate demand curve to the right.
decrease demand for U.S. goods, shifting the U.S. aggregate demand curve to the left.

3. Refer to the graph. The equilibrium level of real income is:
(Points : 5)
$200.
$600.
$800.
$1,000.

4. A fall in the price level: (Points : 5)
reduces the value of money in peoples’ pockets so amount of goods people buy falls.
reduces the value of money in peoples’ pockets so amount of goods people buy rises.
increases the value of money in peoples’ pockets so amount of goods people buy falls.
increases the value of money in peoples’ pockets so amount of goods people buy rises.

5. The multiplier process works because when expenditures don’t equal production: (Points : 5)
businesses adjust prices.
businesses adjust production.
potential output adjusts.
the government steps in to adjust production.

6. Refer to the graph. An economy is in short-run equilibrium at point(s):

(Points : 5)
A only.
B.
C only.
Both A and C.

7. If consumption changes because of a change in a factor other than the price level, then: (Points : 5)
the economy moves from one point on an AD curve to another point on the same curve.
the AD curve shifts.
the economy moves from one point on a short-run aggregate supply (SAS) curve to another point on the same curve.
the SAS curve shifts.

8. If autonomous expenditures are $1,000, income is $5,000, and the marginal propensity to expend is 0.6, then total expenditures according to the expenditure function would be: (Points : 5)
$3,000.
$4,000.
$5,000.
$13,500.

9. In the equation AE = $2,000 + 0.8Y, autonomous expenditures are equal to 80 percent of income. (Points : 5)
True.
False.

10. Which of the following factors will not shift the long-run aggregate supply curve? (Points : 5)
An increase in capital accumulation
An increase in available resources
An increase in the price level
An improvement in production technology

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