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5 Written questions

5 Matching questions

  1. Shifters of Aggregate Demand
  2. Lower marginal tax rate
  3. Resource cost-income approach
  4. Actual Inflation < Anticipated Inflation
  5. Consumer Surplus
  1. a difference between the maximum amount consumers would be willing to pay and the amount that they actually pay
    -below demand curve but above the price
  2. b -will give people the incentive to work more
    -if believed to be long term will shift both SRAS and LRAS
    -long run growth oriented strategy
  3. c Y= employee compensation + proprietor's income + rent + corporate profits + interest income + indirect business taxes + depreciation + net income of foreigners
  4. d -Changes in real wealth
    -Changes in real interest
    -Changes in business and household expectations
    -Changes in expected rate of inflation
    -Changes in income abroad
    -Changes in Exchange rates
  5. e borrowers lose, lenders gain

5 Multiple choice questions

  1. belief that a tax reduction financed with government debt will exert no effect on aggregate demand
  2. When the fed buys bonds.
  3. built in features tha automatically promote a budget deficit during a recession and a budget surplus during an expansion (without a change in policy
  4. reduction in private spending due to higher interest rates generated by a budget deficit financed through government borrowing.
  5. a change in expenditures will have a greater impact than the initial change

5 True/False questions

  1. Height of Supply curvethe minimum price that sellers are willing to accept to supply an additional unit


  2. Actual Unemploymentresults from changes in the economy and imperfect information that prevents workers from being immediately matched up with existing job openings


  3. Effects of Future Inflation-demand rising faster than supply
    -rapid increase in the money stock


  4. Downward sloping demand curve-inverse relationship (negative) between the price of a good and the quantity that buyers are willing to purchase


  5. Anticipated Expansionary Monetary Policy-Shift in monetary policy designed to restrict aggregate demand
    -decrease in money supply: money supply shifts left
    -economy is in boom


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