ECON 2020 Study Guide - Midterm Guide: Aggregate Supply, Aggregate Demand, Consumption Function

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1 Oct 2018

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Please read questions carefully before you start answering them. The following is an algebraic representation of the consumption function: c = a + mpc . Which of the following represents the slope of the function: c, a, mpc, yd. The _____ curve shows the positive relationship between the aggregate price level and the quantity of aggregate output supplied when wages and prices are not fully flexible: aggregate demand, short-run aggregate supply, aggregate spending, long-run aggregate supply. Suppose investment spending increases by billion and as a result the equilibrium income increases by billion. The investment multiplier is: 8, 10, 4, 0. 25. 6. (figure: aggregate demand) look at the figure aggregate demand. The quantity of output demanded if the price level is 120 is: trillion, trillion, trillion, trillion. 7. (figure: the multiplier) look at the figure the multiplier. 8. (figure: the multiplier) look at the figure the multiplier.

Related Questions

Other things equal, what effect will each of the following have on the equilibrium price level and level of real output?

a. An increase in aggregate demand in the steep portion of the aggregate supply curve.

b. An increase in aggregate supply, with no change in aggregate demand (assume that prices and wages are flexible upward and downward).

c. Equal increase in aggregate demand and aggregate supply.

d. A reduction in aggregate demand in the relatively flat portion of the aggregate supply curve.

e. An increase in aggregate demand and a decrease in aggregate supply.

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MACROECONOMICS

1. Which one of the following is not a determinant of aggregate demand?

a. Investment expenditure

b. Technology

c. Consumption expenditure

d. Net exports

2. An improvement in technology will?

a. Decrease aggregate demand

b. Increase aggregate demand

c. Increase aggregate supply

d. Decrease aggregate supply

3. Oil price changes in the mid 80's are an example of?

a. An exiernal supply shock increasing prices and reducing real income

b. An external supply shock decreasing prices and raising real income

c. An external supply shock increasing prices and reducing real in come

d. An external demand shock inceasing prices and reducing real in come

4. The oil shock in 1979-80 was an example of?

a. An external supply shock decreasing prices and increasing real income

b. An external supply shock increasing prices and decreasing real income

c. An external demand shock decreasing prices and real income

d. An external demand shock increasing prices and real income

5. Which one of the following does not cause the aggregate demand curve to slop downward?

a. Changes in relative prices between foreign and domestic goods

b. Wealth effect

c. Changes in real output

d. Changes in interest rate

6.Which one of the following is not determinant of aggregate supply?

a. Productivity

b. Disposal income

c. Capacity and investment plan

d. Cost and availability of resources

7. Which of the following relationship is correct?

a. Equilibrium employment and full employment may not be the same

b. Equilibrium employment and full employment are not related

c. Equilibrium employment and full employment are always the same

d. Equilibrium employment and full employment are never the same

8. Which of the following was not a factor limiting the severity of effects of the oil sopply shock of 1979-80?

a. Increase in use of alternative sources of energy

b. More efficient use of energy

c. Increased supplies of non-OPEC oil

d. More rapid worldwide economic growth

9. Which one of following does not cause the aggregate demand curve to slop downward?

a. Changes in relative prices between foreign and domestic goods

b. Interest rate changes

c. Wealth effect

d. Chnages in real output

10. With aggregate demand shocks?

a. teh aggregte supply curve moves up the aggregate demand curve and increases price and reduces real income

b. the aggregate demand curves moves up the aggregate supply curve and increases prices and real income

c. the aggregate demand curves moves down the aggregate supply curve and increases both prices and real income

d. the aggregate supply curve moves down the aggregate demand curve and reduces prices and increases in real income

Suppose that a hypothetical economy has the following relationship between its real domestic output and the input quantities necessary for producing that level of output.

Input quantity	Real domestic output
400	800
300	600
100	200

(a) What is the level of productivity in this economy?

(b) What is the unit cost of production if the price of each input is $2.00?

(c) If the input price decreases from $2 to $1.50, what is the new per unit cost of production? In what direction would the aggregate supply curve move? What effect would this shift have on the price level and the level of real domestic output if the economy is initially operating in the intermediate range?

(d) Suppose that instead of the input price decreasing, the productivity had increased by 25 percent. What will be the new unit cost of production? In what direction would the aggregate supply curve move? What effect would this shift have on the equilibrium price and output level if the economy?

ECON 2020 Study Guide - Midterm Guide: Aggregate Supply, Aggregate Demand, Consumption Function

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