Home » 1- Which of the following will occur when an economy’s price level increases?

1- Which of the following will occur when an economy’s price level increases?

1- Which of the following will occur when an economy’s price level increases?

a-Aggregate demand will increase.

b-The purchasing power of money will increase.

c-The purchasing power of money will decrease.

d-The real value of wealth will increase.

2-Which of the following is NOT an explanation for the shape of the aggregate demand curve?

a-real balance effect

b-interest rate effect

c-open economy effect

d-investment effect

3-Steadily improving improvements in technology, other things being equal, will result in

a-no change in the price level and steadily increasing output.

b-persistent deflation

c-steadily rising price level (inflation) and steadily increasing output.

d-a steadily falling price level with no change in output.

4- Say’s law states that

a-desired expenditures will equal actual expenditures.

b-people produce only the goods they want.

c-demand is always less than supply.

d-overproduction is never possible because of limited resources.

5-The marginal propensity to consume is

a-real consumption/real disposable income.

b-real saving/real disposable income.

c-change in real consumption/change in real disposable income.

d-change in real saving/change in real disposable income.

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