1)Which of the following cause(s) an increase in thedemand side equilibrium GDP?a)A stronger home...

1)Which of the following cause(s) an increase in the demand side equilibrium GDP?

a)A stronger home currency.

b)A weaker home currency.

c)An increase in the real interest rate.

d)a and c

e)b and c.

2)An inflationary gap is a result of

a) Government deficit.

b) Inadequate aggregate demand.

c) Too much expenditures.

d) Both a and b.

3)Which is more likely to happen as a result of a sudden increase in aggregate demand?

a)Recession only.

b)Inflation only.

c)The economy will be out of equilibrium

Solutions

Expert Solution

Ans. Option b

A weaker currency will make imports from other countries expensive in home country but exports from home to foreign countries cheaper. So, the demand for exports increases but the demand for imports decreases. Thus, the net exports from home country increases, increasing aggregate demand for goods and services.

Ans. Option a

A government budget deficit will be from excess government spending, so, the aggregate demand for goods and services will increase. This will lead to an increase in real output and price level. As both real output and price level will rise, so, this will create an inflationary gap

Ans. Option b

Sudden increase in aggregate demand will lead to shortage of goods and services in the economy. This will put an upward pressure on the price level, leading to inflation

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

1) Which of the following may cause a departure from Equilibrium GDP: a. imports b. taxes...

1) Which of the following may cause a departure from Equilibrium GDP: a. imports b. taxes c. increase in savings d. all the above 2) Which of the following is NOT an ‘injection’ into the income-expenditures stream: a. exports b. government purchases c. investment d. imports 3) A limitation of the Aggregate Expenditures model is that it doesn’t directly show: a. price level changes b. any role for net exports c. investment spending d. none of the above 4) The...

1. Which of the following would cause an increase in the market supply of accountants (increase...

1. Which of the following would cause an increase in the market supply of accountants (increase labor supply curve) Select one: a. an increase in wages offered to tax attorneys (an occupation alternative to accounting) b. an increase the in value of the marginal product of accountants. c. a decrease in wages offered to tax attorneys (an occupation alternative to accounting) d. stricter qualifications needed to be a certified public accountant (CPA) 2. Value of the marginal product of labor...

14) An increase in the money supply will cause an increase in which of the following...

14) An increase in the money supply will cause an increase in which of the following variables? A) output B) investment C) consumption D) all of the above E) none of the above 15) An increase in the money supply must cause which of the following? A) a leftward shift in the IS curve B) a reduction in the interest rate and ambiguous effects on investment C) an increase in investment and a rightward shift in the IS curve D)...

According to supply-side theory, a cut in taxes will tend to cause ________. an increase in...

According to supply-side theory, a cut in taxes will tend to cause ________. an increase in the amount of total tax revenue collected a decline in the amount of total tax revenue collected individual workers to devote more time to leisure activities no change in the amount of total tax revenue collected

What might cause an increase in nominal GDP? A. Increase in production only B. decrease in...

What might cause an increase in nominal GDP? A. Increase in production only B. decrease in population C. Increase in prices only D. Increase in prices or increase in quantity of production.

Which of the following actions will cause the equilibrium to shift such that the partial pressure...

Which of the following actions will cause the equilibrium to shift such that the partial pressure of NO gas will increase? 2NO(g) + O2(g) ⇌ 2NO2(g) ΔH = −13.1 kJ Increase the pO2(g) Increase the volume Lower the reaction temperature Decrease the pNO2(g)

Which of the following would cause both the equilibrium price and equilibrium quantity of potatoes (assume...

Which of the following would cause both the equilibrium price and equilibrium quantity of potatoes (assume that potatoes are an inferior good) to decrease? an increase in consumer income a freeze that sharply reduces potato output a decrease in consumer income a technological advancement that results in a bumper crop of potatoes Prices of Golden Eggs (assume that this is a normal good) have risen steadily in recent years. Over this same period, prices for regular eggs have dropped and...

Which of the following would cause prices to rise and real GDP to fall in the...

Which of the following would cause prices to rise and real GDP to fall in the short run? Question options: an increase in the expected price level an increase in the capital stock an increase in the quantity of labor available

1. Which of the following choices would cause the greatest increase in GFR? Show your work. a. 10% increase...

1. Which of the following choices would cause the greatest increase in GFR? Show your work. a. 10% increase in glomerular blood hydrostatic pressure (BHP) b. 50% decrease in capsular hydrostatic pressure (CHP) c. 50 decrease in blood colloid osmotic pressure (BCOP) d. 50% constriction of both the afferent and efferent arterioles 2. For each of the cases below, indicate whether there is an alkalosis or acidosis present. For each case, indicate whether the cause is metabolic or respiratory. For each case, indicate whether the condition...

Which of the following does not cause an increase in the pension expense for a defined...

Which of the following does not cause an increase in the pension expense for a defined benefit plan? Group of answer choices Recognized prior service cost amortization Service cost Expected return on pension plan assets Interest cost

Subjects