Macroeconomics Exercise
Macroeconomics I
Spring 2012
Homework 5
Instructor: Dang Vu, Ph.D.
Student name:
Student ID:
Due date: 04/26/12
Part I: Multiple Choice Questions: (60 points)
Choose the best answer (1) among the choices for each question. Please make sure you understand the economics behind all answers rather than just copying your friend’s answers!
I will ask you to explain your answer in class. Failure to explain your answer even though you did it right in your homework will lead to deduction of points for that answer. Each
True/False question count as half of a normal multiple choice question.
1. At every point on the AD curve
a. aggregate expenditure is equal to output.
b. the demand for money is equal to the supply of money.
c. the change in aggregate inventories is equal to zero.
d. all of the above.
e. none of the above.
2. A rise in the price level causes a
a. rightward shift of the AD curve.
b. leftward shift of the AD curve.
c. movement rightward along the AD curve.
d. movement leftward along the AD curve.
e. leftward shift of the AD curve, as well as a movement leftward along the AD curve. 3. As we move rightward along the AD curve,
a. the price level falls.
b. the interest rate falls.
c. investment spending increases.
d. all of the above.
e. none of the above.
4. According to the AS-AD model, the short-run effects of an increase in government spending include
a. a rise in the interest rate.
b. a fall in output.
c. a fall in the price level.
d. all of the above.
e. none of the above.
1
5. According to the AS-AD model and its behavior in the long run, the long-run effects of an increase in government spending include
a. a drop in the interest rate.
b. a rise in output.
c. a rise in the price level.
d. all of the above.
e. none of the above.
6. The aggregate supply curve tells us
a. the level of output at which aggregate expenditure equals output, for each possible price level.
b. the price level
Spring 2012
Homework 5
Instructor: Dang Vu, Ph.D.
Student name:
Student ID:
Due date: 04/26/12
Part I: Multiple Choice Questions: (60 points)
Choose the best answer (1) among the choices for each question. Please make sure you understand the economics behind all answers rather than just copying your friend’s answers!
I will ask you to explain your answer in class. Failure to explain your answer even though you did it right in your homework will lead to deduction of points for that answer. Each
True/False question count as half of a normal multiple choice question.
1. At every point on the AD curve
a. aggregate expenditure is equal to output.
b. the demand for money is equal to the supply of money.
c. the change in aggregate inventories is equal to zero.
d. all of the above.
e. none of the above.
2. A rise in the price level causes a
a. rightward shift of the AD curve.
b. leftward shift of the AD curve.
c. movement rightward along the AD curve.
d. movement leftward along the AD curve.
e. leftward shift of the AD curve, as well as a movement leftward along the AD curve. 3. As we move rightward along the AD curve,
a. the price level falls.
b. the interest rate falls.
c. investment spending increases.
d. all of the above.
e. none of the above.
4. According to the AS-AD model, the short-run effects of an increase in government spending include
a. a rise in the interest rate.
b. a fall in output.
c. a fall in the price level.
d. all of the above.
e. none of the above.
1
5. According to the AS-AD model and its behavior in the long run, the long-run effects of an increase in government spending include
a. a drop in the interest rate.
b. a rise in output.
c. a rise in the price level.
d. all of the above.
e. none of the above.
6. The aggregate supply curve tells us
a. the level of output at which aggregate expenditure equals output, for each possible price level.
b. the price level