Financial Math Answers

What happens when the minimum wage increases, in the short run?

Select one:

a. Aggregate demand shifts right, the price level rises, and real output rises

b. Aggregate supply shifts down, the price level falls, and real output increases

c. Aggregate demand shifts left, the price level falls, and real output falls

d. Aggregate supply shifts up, the price level rises, and real output decreases

If foreign income decreases and the domestic economy is at potential output, then domestic aggregate demand will __________ in the short run and domestic aggregate supply will __________ in the long run.

Select one:

a. Decrease not change

b. Increase, not change

c. Increase, increase

d. Decrease, decrease

Assuming aggregate demand remains constant, supply shocks that cause a leftward shift in the aggregate supply curve will------.

Select one:

a. increase both prices and the rate of unemployment

b. decrease the rate of unemployment

c. increase real output

d. decrease prices

n the AS/AD model, an expansionary monetary policy---------.

Select one:

a. reduces aggregate demand by reducing interest rates

b. reduces aggregate demand by raising interest rates

c. increases aggregate demand by raising interest rates

d. increases aggregate demand by reducing interest rates

Which of the following statements are correct?

a. If the marginal propensity to consume increases, the equilibrium level of income will increase.

b. In an open economy with a government sector the sum of the marginal propensity to consume and the marginal propensity to save is always equal to 1.

c. If the tax rate decreases, the aggregate spending curve will shift parallel upwards.

Select one:

A. b

B. b and c

C. a and b

D. a and c

Which of the following statements are correct?

1. The introduction of government spending increases the size of the multiplier.
2. The introduction of taxes increases the size of the multiplier.
3. The introduction of taxes reduces the slope of the consumption function.

Select one:

A. None of the statements is correct.

B. A

C. B

D. C

Investment decisions cannot be affected by

Select one:

a. Expected rate of return

b. Cost of capital goods

c. Interest rate

d. None of the options are correct

One of the following cannot be considered as a factor that affect consumption

Select one:

a. None of the options are correct

b. Interest rates

c. Wealth

d. Price expectations

Total spending in the Keynesian model of a closed economy without government includes

Select one:

a. Imports and government spending

b. Consumption and Imports

c. Investment and government spending

d. Consumption and investment