1.

(03.01 MC) Use the graph to answer the question that follows. Which of the following changes could explain the shift shown in the graph? (2 points)

A	Increase in net exports
B	Decrease in price level
C	Increase in income tax rates
D	Increase in interest rates
E	Decrease in output

2.

(03.01 LC) Which one of the following statements is true regarding shifts in the aggregate demand curve? (2 points)

A	The aggregate demand curve shifts inward, due to an increase in net exports.
B	The aggregate demand curve shifts outward, due to an increase in imports.
C	The aggregate demand curve shifts outward, due to a decrease in investment.
D	The aggregate demand curve shifts inward, due to decrease in government spending.
E	The aggregate demand curve shifts inward, due to an increase in household consumption.

3.

(03.02 MC) What is the maximum change in output when government spending increases from $200 to $300, given the marginal propensity to save is 0.5? (2 points)

A	The output increases by $200.
B	The output decreases by $200.
C	The output increases by $600
D	The output increases by $100.
E	The output increases to $400.

5.

(03.03 MC) Which of the following best describes the reason for trade-off between inflation and unemployment in the short run? (2 points)

A	Sticky prices and wages
B	Sticky prices and flexible wages
C	Flexible prices and sticky wages
D	Flexible prices and wages
E	Producers' unwillingness to respond to price changes

7.

(03.03 LC) What is true about movement along the aggregate supply curve in the short run? (2 points)

A	There is an inverse relationship between inflation and the unemployment rate.
B	There is no direct relationship between inflation and the unemployment rate.
C	There is a positive relationship between inflation and the unemployment rate.
D	An increase in inflation creates a demand shock that in turn increases the unemployment rate.
E	There is an inverse relationship between the general price level and the wage rate.

9.

(03.04MC) In the long run, the aggregate output is primarily determined by the level of resources available in the economy. What does this statement tell us about the shape of the long-run aggregate supply curve? (2 points)

A	The LRAS is a vertical line when aggregate output is plotted against price level.
B	The LRAS is an upward-sloping curve when aggregate output is plotted against price level.
C	The LRAS is a horizontal line when aggregate output is plotted against units of labor employed.
D	The LRAS is a horizontal line when aggregate output is plotted against price level.
E	The LRAS is a vertical line when aggregate output is plotted against units of labor employed.

1.

(03.05 MC) Use the following graph to answer the question that follows.

LRAS Price level SRAS A P Z AD Ya Yz Real GDP