answer+page--unit+three

__**David Hurst (11-20)**__
11. In which of the following ways does the real-balance effect influence price level and real GDP?

a. I only
15. The following graph best shows which of the following economic cycle conditions? d. Recession

16. The term monetary policy can be most accurately explained as:

e. I, II, and III
====20. According to the graph, in which the AD is the “before” curves and AD1, AD2, and AD3 are the “after curves. Other things equal, a decline in net exports caused by a change in comes abroad is depicted by which curve?====

__** Susan Speaker (21-30) **__
21. What is the size of the labor force? (Use above information)

b) Output: Increase Price level: Decrease employment: Increase
31. A leftward shift in aggregate demand will cause employment and price level change in which ways? d) Decrease/ Decrease
 * __Anthony Farber (31-40)__**

32. The economies automatic stabilizers include: d) 1 and 11 only

33. What is the size of the labor force? d) 3,000

34. What is the unemployment rate? e) Not given

35. If Susan's disposable income increases from $550 to $600 and her level of personal consusmption expenditures increase from $430 to $480, you may conclude that her marginal propensity to b) consume is 0.8

36. Which of the following is NOT an aggregate demand shifter? d) government regulations

37. The investment demand curve: e) shows a inverse (negative) relationship between interest rate and investment

38. Which of the following is NOT an aggregate supply shifter? b) household debt

39. What fiscal policy actions would be effective in fighting a recession? b) $10 billion decrease/ $10 billion increase

40.What would cause the change in the graph? c) Government spending increase

41. Which of the following is NOT a reason why product prices tend to be "sticky" or inflexible in a downward direction? c) Inflexible GDP
 * __Azeem Feroz (41-50)__**

42. Contractionary fiscal policy includes:

I. Decreased government spending II. Increased taxes III.Selling bonds on the open market

d) I and II only

43. Tax revenues automatically increasing during a economic expansions and decreasing during recessions is referred to as: b) Built-in Stability

44. Several problems of timing may arise in connection with fiscal policy, these include:

I. Recognition Lag II. Administrative Lag III. Operational Lag

e) I, II, and III

45. Refer to the diagram above. If the economy's tax rate is set at c, a decrease to a tax rate of b will: c) Increase total tax revenue

46. Refer to the diagram. Suppose the price level is P1 and GDP is at its full employment potential Qf. Given time to fully adjust to the change in the price level, a shift in aggregate demand from AD1 to AD2 would move the economy to: a) Point a

47. What is one of the central ideas behind the Laffer Curve? e) A cut in the tax rate may increase tax revenue.

48. A simultaneous increase in government spending and taxes would: b) Increase GDP

49. All else equal, the government spending multiplier: b) = the investment multiplier

50. A decrease in the money supply would: a) Raise interest rates, reducing investment and GDP