Inflation and Aggregate Demand Curve
Name: ________________________ Class: ___________________ Date: __________
ID: A
Test 2
5. If the economy is in a recessionary gap and the price level falls very slowly, then the result will be a prolonged period of
a. high unemployment.
b. production above potential GDP.
c. shortages in supply.
d. inflation whenever supply increases.
Figure 10-8
6. The slope of the consumption function is measured by the marginal propensity to save.
7. If the stock market falls by 25 percent next year and remains down, what is most likely to happen to the consumption function?
a. It will shift downward.
b. It will shift upward.
c. It will not shift, but people will move upward along the consumption function.
d. It will not shift, but people will move downward along the consumption function.
1. Figure 10-8 illustrates a period of
a. low unemployment and high inflation.
b. high unemployment and low inflation.
c. high unemployment and high inflation.
d. low unemployment and low inflation.
8. If total spending is greater than current output,
GDP will rise.
2. Households can finance their consumer spending from current
a. none of them.
b. income and current wealth.
c. wealth.
d. income.
Figure 10-1
3. If consumers receive an increase in income of
$1,000, their spending will increase by a smaller amount. 4. The aggregate supply curve will shift to the left if
a. the capital stock of the economy increases.
b. the money wage rate increases.
c. technology and productivity increase in the economy. d. energy prices fall.
9. If the price level in Figure 10-1 were 100,
a. inventories would be accumulating.
b. firms would have to lower their prices.
c. shortages of goods would exist.
d. aggregate quantity supplied would exceed aggregate quantity demanded.
1
Name: ________________________
ID: A
10. If the price level in Figure 10-1 were 110,
a. inventories would be accumulating.
b. firms would have to lower their
ID: A
Test 2
5. If the economy is in a recessionary gap and the price level falls very slowly, then the result will be a prolonged period of
a. high unemployment.
b. production above potential GDP.
c. shortages in supply.
d. inflation whenever supply increases.
Figure 10-8
6. The slope of the consumption function is measured by the marginal propensity to save.
7. If the stock market falls by 25 percent next year and remains down, what is most likely to happen to the consumption function?
a. It will shift downward.
b. It will shift upward.
c. It will not shift, but people will move upward along the consumption function.
d. It will not shift, but people will move downward along the consumption function.
1. Figure 10-8 illustrates a period of
a. low unemployment and high inflation.
b. high unemployment and low inflation.
c. high unemployment and high inflation.
d. low unemployment and low inflation.
8. If total spending is greater than current output,
GDP will rise.
2. Households can finance their consumer spending from current
a. none of them.
b. income and current wealth.
c. wealth.
d. income.
Figure 10-1
3. If consumers receive an increase in income of
$1,000, their spending will increase by a smaller amount. 4. The aggregate supply curve will shift to the left if
a. the capital stock of the economy increases.
b. the money wage rate increases.
c. technology and productivity increase in the economy. d. energy prices fall.
9. If the price level in Figure 10-1 were 100,
a. inventories would be accumulating.
b. firms would have to lower their prices.
c. shortages of goods would exist.
d. aggregate quantity supplied would exceed aggregate quantity demanded.
1
Name: ________________________
ID: A
10. If the price level in Figure 10-1 were 110,
a. inventories would be accumulating.
b. firms would have to lower their