Question

Product 13) 13) The gap that exists when equilibrium real Gross Domestic (GDP) is greater than full employment real Gross Domestic Product (GDP) is called a(n) A) demand gap. C) recessionary gap B) employment gap D) inflationary gap 14) 14) Economic growth will NOT result in inflation if aggregate demand shifts A) outward to the right at the same speed as aggregate supply B) outward to the right as aggregate supply shifts inward to the left. C) inward to the left at the same speed as aggregate supply D) inward to the left as aggregate supply shifts outward to the right. 15) 15) Inflation that is caused by an increase in aggregate demand which is not matched by an increase in aggregate supply is called A) demand pull inflation. C) cost push inflation B) cost pull inflation D) demand push inflation 16) Which of the following represents the correct relationship between 6) disposable income (DI), consumption (C) and saving (S)? 17) Suppose that when disposable income increases by $2,000 spending increases by $1,500. The MPC would be B) 25 A) 50. 18) 18) The relationship between households' planned consumption expenditures and households level of disposable real income is alled A) the savings function. 8) the consumption function. C) the investment function. D) the household aggregate demand function. 19) 19) Where the consumption function intersects the 45-degree line A) saving will be zero. B) savings will be negative. C) the average propensity to consume is 05, D) consumption will equal only autonomous consumption 20) 20) If the marginal propensity to save (MPS)-0.1, then A) the APC-0.9 B) the APS 0.1 C) consumption equals $1,800 when income equals $2.000 D) the MPC 09. 21) Which of the following would increase the level of planned 21) investment? A) An expectation of higher future costs B) An increase in business taxes C) An expectation of higher future profits D) An increase in the interest rate