$$

Q$1.,?$

a$)$ An increase in consumer confidence

b$)$ A decrease in government spending combined with an increase in investment tax credit to firms

c$)$ An increase in the discount rate by the central bank, coupled with a decrease in world oil price

d$)$ An increase in both consumer confidence and investment

e$)$ None of the above

Q$2.$ AD$-$AS $,?$

a$.$ After a demand shock, the AD curve shifts back to its initial position.

b$.$ After a supply shock, the SRAS curve shifts back to its initial position.

c$.$ After a supply shock, AD shifts in the opposite horizontal direction to that of SRAS.

d$.$ After a demand shock, SRAS shifts in the same horizontal direction as AD$.$

e$.$ None of a$-$d

Q$3.$ Suppose a rumor spread in the Wall Street that the Fed Chairperson Yanet Jellen will take more lenient measures accommodating price level increases. The rumor is false, but

$18/25$

people believe it anyway. Which of the following would be a short$-$run effect of this rumor?

a$.$ Money supply increases, shifting AD to the right and leading to higher output and a higher price level.

b$.$ The SRAS curve shifts to the left and leading to lower output and a higher price level.

c$.$ Businesses become more optimistic about future profitability. As a result, they increase their investments, shifting $AD$ to the left.

d$.$ People increase their savings in anticipation of higher future prices. This leads to a decrease in consumption, shifting AD to the left.

$4.,-?$

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