Question

QUESTION 4

1. During recessions which type of spending falls?

   	a.	consumption and investment
   	b.	investment but not consumption
   	c.	consumption but not investment
   	d.	neither consumption nor investment

QUESTION 22

1. Which of the following shifts aggregate demand to the right?

   	a.	Congress reduces purchases of new weapons systems.
   	b.	The Fed buys bonds in the open market.
   	c.	The price level falls.
   	d.	Net exports fall.

QUESTION 25

1. Aggregate demand shifts right when the government

   	a.	raises personal income taxes.
   	b.	increases the money supply.
   	c.	repeals an investment tax credit.
   	d.	All of the above are correct.

QUESTION 46

1. The Stock Market Boom of 2015
   Imagine that in 2015 the economy is in long-run equilibrium. Then stock prices rise more than expected and stay high for some time.
   
   Refer to Stock Market Boom 2015. Which curve shifts and in which direction?

   	a.	aggregate demand shifts right
   	b.	aggregate demand shifts left
   	c.	aggregate supply shifts right
   	d.	aggregate supply shifts left.

QUESTION 47

1. The Stock Market Boom of 2015
   Imagine that in 2015 the economy is in long-run equilibrium. Then stock prices rise more than expected and stay high for some time.
   
   Refer to Stock Market Boom 2015. In the short run what happens to the price level and real GDP?

   	a.	both the price level and real GDP rise.
   	b.	both the price level and real GDP fall.
   	c.	the price level falls and real GDP rises.
   	d.	the price level rises and real GDP falls.

QUESTION 48

The Stock Market Boom of 2015
Imagine that in 2015 the economy is in long-run equilibrium. Then stock prices rise more than expected and stay high for some time.

Refer to Stock Market Boom 2015. What happens to the expected price level and what impact does this have on wage bargaining?

	a.	The expected price level rises. Bargains are struck for higher wages.
	b.	The expected price level falls. Bargains are struck for lower wages.
	c.	The expected price level rises. Bargains are struck for lower wages.
	d.	The expected price level falls. Bargains are struck for higher wages.

QUESTION 35

1. Other things the same, if workers and firms expected inflation to be 2%, but it is only 1% then

   	a.	employment and production rise.
   	b.	employment and production fall.
   	c.	employment falls and production rises.
   	d.	employment rises and production falls.

QUESTION 41

1. If the government provides an investment tax credit and increases income taxes,

   	a.	real GDP rises, and the price level could rise, fall, or stay the same.
   	b.	real GDP falls, and the price level could rise, fall, or stay the same.
   	c.	the price level rises and real GDP could rise, fall or stay the same
   	d.	None of the above are necessarily correct.

Answer 1

4. Answer

Option A is correct

i.e

During recession consumption and investment spendings are falls.

Because
during recession from will be producing less and therefore will need fewer workers. People tend to save money because there is a fall in confidence.if people expect to be made unemployed then you don't want to spend and borrow saving become more attractive.

Answer 22
Option b is correct

i.e

The fed buys bonds in the open market.

Because

the aggregate demand curve to the right as the component of aggregate demand that is consumption spending investment spending government spending and spending on exports imports rise.

Answer 25

Option B correct i.e increase the money supply

aggregate demand shift right when the government increases the money supply

Because
increasing money supply causes reduction in interest rate and further spending and there for an increase in aggregate demand. Increase in the money supply will lead to an increase in consumer spending this increase will shift the aggregate demand curve to the right.