Aggregate Demand Curve

Use this information to answer questions 1 - 4, assume the entire economy consists of only three markets.

Market 1 Market 2 Market 3
Price Qd Price Qd Price Qd
$9 10 $9 5 $9 50
$8 20 $8 10 $8 60
$7 30 $7 20 $7 70
$6 40 $6 30 $6 80
$5 50 $5 40 $5 90
Market 1 Market 2 Market 3
Price Qs Price Qs Price Qs
$9 50 $9 40 $9 90
$8 40 $8 30 $8 80
$7 30 $7 20 $7 70
$6 20 $6 10 $6 60
$5 10 $5 5 $5 50

1. Which of the following is the correct aggregate demand curve:

Question 1 options:

Price QAD
$27 65
$24 90
$21 120
$18 150
$15 180

Price QAD
$9 65
$8 90
$7 120
$6 150
$5 180

Price QAD
$27 180
$24 150
$21 120
$18 90
$15 65

Price QAD
$9 180
$8 150
$7 120
$6 90
$5 65
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Question 2 (1 point) Question 2 Unsaved
Which of the following is the correct aggregate supply curve:
Question 2 options:

Price QAD
$27 65
$24 90
$21 120
$18 150
$15 180

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Price QAD
$9 65
$8 90
$7 120
$6 150
$5 180

Price QAD
$27 180
$24 150
$21 120
$18 90
$15 65

Price QAD
$9 180
$8 150
$7 120
$6 90
$5 65
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Question 3 (1 point) Question 3 Unsaved
What is the equilibrium price level?
Question 3 options:

$27

$21

$9

$7
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Question 4 (1 point) Question 4 Unsaved
What is the equilibrium output level?
Question 4 options:

180

120

65

150

90
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Question 5 (1 point) Question 5 Unsaved
Reagan's plan for economic growth was called Supply-Side Economics. Which of the following was included in Reagan's plan?
Question 5 options:

increase the use of tariffs

increase exports

increase private sector investment

increase governmental spending
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Question 6 (1 point) Question 6 Unsaved
Lyndon Baines Johnson (LBJ) started the current governmental debt by:
Question 6 options:

borrowing to finance the Korean War

borrowing to finance the Vietnam War

borrowing to finance World War II

increasing taxes
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Question 7 (1 point) Question 7 Unsaved
The sum of accumulated annual federal budget deficits minus budget surpluses refers to
Question 7 options:

the national debt.

the cyclically unbalanced budget.

the trade deficit.

the federal government net worth.
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Question 8 (1 point) Question 8 Unsaved
Suppose you felt that the government should conduct monetary policy to correct for an inflationary period, but you also felt that the interest rate should not be changed. You would argue that the government should:
Question 8 options:

sell bonds

buy bonds

increase its exhaustive spending

decrease its non-exhaustive spending
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Question 9 (1 point) Question 9 Unsaved
Suppose you felt that the government should conduct fiscal policy to correct for recessionary period, but you also felt that the tax rate should not be changed. You would argue that the government should:
Question 9 options:

decrease the money supply

increase the money supply

increase its exhaustive spending

decrease its non-exhaustive spending

increase the interest rate
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Question 10 (1 point) Question 10 Unsaved
The MPS = .2, which of the following changes in AD eliminates a $50 million recessionary gap:
Question 10 options:

A $10 million increase in Import spending.

A $10 million decrease in Import spending.

A $50 million increase in Government spending.

A $50 million decrease in Government spending.
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Question 11 (1 point) Question 11 Unsaved
The MPC = .9, which of the following changes in AD eliminates a $100 million recessionary gap:
Question 11 options:

A $10 million increase in Investment spending.

A $5 million decrease in Investment spending.

A $100 million increase in Export spending

A $5 million decrease in Export spending.
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Question 12 (1 point) Question 12 Unsaved
Using fiscal policy, if the MPC = .8, which of the following changes in AD alleviates an inflationary gap of $100 billion.
Question 12 options:

A $100 billion increase in the Money Supply.

A $20 billion increase in the Money Supply.

A $100 billion increase in Government spending.

A $20 billion decrease in Import spending.

A $20 billion decrease in Governmental spending.
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Question 13 (1 point) Question 13 Unsaved
In general, if the macroeconomy experiences inflation the federal government should:
Question 13 options:

Increase the aggregate demand.

Decrease the aggregate demand.

Create a balanced budget.

Eliminate the national debt.
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Question 14 (1 point) Question 14 Unsaved
The tax deferred attribute of your IRA represents:
Question 14 options:

you retirement account being non-taxable, until withdrawal

a reduction in your taxable income

an increase in your taxable income

IRAs being completely non-taxable
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Question 15 (1 point) Question 15 Unsaved
OPEC's cartel created the problem of Stagflation. What is Stagflation?
Question 15 options:

simultaneous increases in debts and inflation

simultaneous increases in debts and unemployment

simultaneous increases in unemployment and inflation

simultaneous increases in debts and taxes
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Question 16 (1 point) Question 16 Unsaved
When the government focuses their spending increases primarily on one segment of the economy, which the following is likely to occur?
Question 16 options:

A Crowding Effect

An inflationary expectation

A budget deficit

A budget surplus
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Question 17 (1 point) Question 17 Unsaved
The pre-tax contribution on your IRA represents:
Question 17 options:

you retirement account being non-taxable, until withdrawal

a reduction in your taxable income

an increase in your taxable income

pre-tax contributions do not effect IRAs.
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Question 18 (1 point) Question 18 Unsaved
Inflation that began in the 1960's was caused by:
Question 18 options:

increased governmental spending that increased interest rates to the private sector.

the economy being at full employment

government spending increases without raising taxes

savings and investment being the only leakage and injection that equaled in this time frame.

increased oil prices caused by OPEC
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Question 19 (1 point) Question 19 Unsaved
Who was the first President to promote zero deficit growth during their administration?
Question 19 options:

George W Bush (43rd)

Jimmy Carter

Ronald Reagan

George Bush (41st)

Bill Clinton
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Question 20 (1 point) Question 20 Unsaved
Which of the following Presidents signed the Civil Rights Act?
Question 20 options:

John Kennedy

Lyndon Baines Johnson

Martin Luther King

Richard Nixon

Jimmy Carter
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Question 21 (1 point) Question 21 Unsaved
In the history of the U.S. economy which of the following schools have had the most impact on the government during the given time period
Question 21 options:

the Keynesian school before World War 2

the Classical school after World War 2

the Supply Siders in the early 1980's

the Keynesian school before 1884
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Question 22 (1 point) Question 22 Unsaved
Governmental debts are bad for an economy because:
Question 22 options:

interest payments on the debt tie up money that could be used elsewhere

debts render fiscal tools more effective than monetary tools

tax cuts are politically difficult to sell to the people of the United States

all of the above
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Question 23 (1 point) Question 23 Unsaved
Which of the following is an example of "trickle-down economics"?
Question 23 options:

an income-tax cut that effects everyone.

large tax cuts causing large budget deficits.

a capital gains tax cut

Tax cuts tend to help higher income individuals more than lower income ones.
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Question 24 (1 point) Question 24 Unsaved
Inflation that began in the 1970's was caused by:
Question 24 options:

increased governmental spending that increased interest rates to the private sector.

the economy being at full employment

government spending increases without raising taxes

savings and investment being the only leakage and injection that equaled in this time frame.

increased oil prices caused by OPEC
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Question 25 (1 point) Question 25 Unsaved
Jimmy Carter's plan to stimulate the economy included:
Question 25 options:

An increase in the money supply

A decrease in the money supply

An increase in the interest rates

A decrease in the interest rates
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Question 26 (1 point) Question 26 Unsaved


Use this budget (assuming the government pays no interest and no debt existed before year 1) to answer questions 26-33
Revenues Expenditures
Year 1 $100 billion $550 billion
Year 1 $100 billion $450 billion
Year 1 $100 billion $400 billion
Year 1 $100 billion $450 billion
Year 1 $100 billion $450 billion
Year 6 $750 billion $550 billion

26. At the completion of year 1, the government operated with a:

Question 26 options:

budgetary surplus of $450 billion

budgetary deficit of $550 billion

a national debt of $550 billion

a national debt of $450 billion

two of the above are correct
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Question 27 (1 point) Question 27 Unsaved
At the completion of year 2, the government operated with a:
Question 27 options:

budgetary surplus of $350 billion.

budgetary deficit of $350 billion.

a national debt of $800 billion.

a national debt of $1 trillion.

two of the above are correct
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Question 28 (1 point) Question 28 Unsaved
When comparing the completed year 1 budget to the completed year 2 budget, which is true:
Question 28 options:

the government's debt increased by $150 billion

the government's deficit increased by $100 billion

the government experienced deficit reduction

the national debt did not grow

two of the above are correct
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Question 29 (1 point) Question 29 Unsaved
At the completion of year 3, which of the following would be a true statement:
Question 29 options:

the government's debt increased by $250 billion

the government's deficit decreased by $50 billion

the government experienced zero deficit growth

the national debt did not grow

two of the above are correct
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Question 30 (1 point) Question 30 Unsaved
At the completion of year 4, which of the following would be a true statement:
Question 30 options:

the government's deficit increased by $150 billion

the government's deficit decreased by $150 billion

the government's debt increased by $350 billion

the national debt did not grow

two of the above are correct
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Question 31 (1 point) Question 31 Unsaved
At the completion of year 5, which of the following would be a true statement:
Question 31 options:

the government's debt increased by $550 billion

the government's deficit decreased by $50 billion

the government experienced zero deficit growth

the national debt did not grow

two of the above are correct
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Question 32 (1 point) Question 32 Unsaved
Identify - after year 6 if the government redirects the budget surplus into "other" programs:
Question 32 options:

zero debt growth spending

zero deficit growth spending

operating a balanced budget

none of the above
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Question 33 (1 point) Question 33 Unsaved
After year 6 when using the true accounting approach, which of the following would be correct?
Question 33 options:

the national debt is at $1.2 trillion

the national debt is at $250 billion

the national debt is at $1.6 trillion

the national debt is at $350 billion