1. Suppose an economy is in long-run equilibrium. Anincrease in consumption expenditure will:

?A. shift the short-run aggregate supply curve rightward andincrease both the price level and real output in the long run.

?B. increase the price level in the long run but have no effecton real gross domestic product.

?C.. shift the aggregate demand curve rightward and increase thereal output in the long run.

?D. decrease both the price level and real gross domesticproduct in the long run

2. A rise in the price of bacon from $14 per pound to $16per pound will reduce the purchasing power of the dollar b

?A. 2 pounds of bacon.

?B. 0.06 pounds of bacon.

?C. 0.55 pounds of bacons.

?D. 5 pounds of bacon.

3.

Following the unexpected good performance of Leathex, all itsemployees were given a one-time bonus. This consequently led to arightward shift of the demand curve for shoes manufactured by thecompany and a leftward shift of the demand curve for socks. Thisshows that shoes are:?

?A. substitutes.

?B. normal goods.

?C. complementary goods

?D. inferior goods.

4. 

The buyers and sellers in the country of Perylia use corn as amedium of exchange. This means that:?

?Perylia uses commodity money. 

?corn can be used as a store of value but not as a unit ofaccount in Perylia. 

?Perylia uses fiat money.

?corn cannot be used as a store of value or as a unit of accountin Perylia.

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