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In Figure 6-1, a movement from point A to point B can be explained by A) an increase in t

In Figure 6-1, a movement from point A to point B can be explained by A) an increase in t

In Figure 6-1, a movement from point A to point B can be explained by

A) an increase in the real value of cash balances.

B) a decrease in the real value of cash balances.

C) the decrease in interest rates.

D) the increase in exports to the foreign sector.

22) In Figure 6-1, a movement from point B to point A can be explained by

A) an increase in the real value of cash balances.

B) a decrease in the real value of cash balances.

C) the decrease in interest rates.

D) the increase in exports to the foreign sector.

 

23) In Figure 6-1, a movement from point C to point B could be explained by

A) an increase in the price level.

B) a decrease in the price level.

C) the end of a short-term war.

D) the real-balance effect.

24) In Figure 6-1, a movement from point B to point C could be explained by

A) an increase in the price level.

B) a decrease in the price level.

C) the start of a short-term war.

D) the real-balance effect.

 

25) An individual holds $10 000 in a non-interest-earning checking account, and the overall price level rises significantly. Other things constant, we would expect

A) the individual's real wealth to decrease and consumption to diminish.

B) the individual's stock of real wealth to decrease but real national income to increase.

C) no change in the individual's real wealth but a decline in real national product.

D) the individual's wealth to increase.

26) The aggregate demand curve usually

A) is vertical.

B) slopes upward.

C) slopes downward.

D) is horizontal.

 

27) Higher interest rates

A) reduce the quantity of goods and services demanded because they increase the cost of borrowing money.

B) reduce the quantity of goods and services demanded because they reduce the income of bankers and other creditors.

C) increase the quantity of goods and services demanded because they increase the incomes of all people in the economy.

D) increase the quantity of goods and services demanded because they lower the costs of building new plants and equipment.

 

28) The horizontal axis for an aggregate demand curve measures

A) quantity demanded of the representative good.

B) real GDP.

C) output of all goods and services measured as a quantity index.

D) disposable personal income.

 

29) A rise in the price level will have a direct effect on spending because

A) people like to spend more when prices are higher.

B) the real value of the money people have varies directly with the price level, and so does their spending.

C) the real value of the money people have decreases and they can buy less with it.

D) the more money they have the more it is worth and the more goods and services they can buy.

30) If you have $1 000 and the GDP deflator increases from 100 to 120, then

A) the $1 000 will buy 20 percent less of the goods and services produced by society.

B) the $1 000 will buy 20 percent more of the goods and services produced by society.

C) the value of the $1 000 increases.

D) you will be able to buy fewer goods, but the real value of those goods will increase.

Abhinav 07-Dec-2019

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