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2) Government intervention into economic activity will NOT lead to a change in the
price level in the _______.
A) short run.
B) medium run.
C) long run.
D) All of the above.
3) In the long run, the AS curve is _______ because prices are _______.
A) horizontal; rigid.
B) horizontal; flexible.
C) vertical; rigid.
D) vertical; flexible.
5) In the medium run, a negative aggregate demand shock will lead to a _______ in
equilibrium.
A) lower price level.
B) lower output level.
C) All of the above.
D) None of the above.
6) When the economy goes into a recession, we can generally expect that _______.
A) inflation will decrease while output will increase.
B) inflation will increase while unemployment will decrease.
C) inflation and output will increase.
D) inflation will decrease while unemployment will increase.
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BSP2001 MACRO AND INTERNATIONAL ECONOMICS SEM 1 2015/2016
9) Which of the following can affect the size of the output gap?
A) Changes to potential GDP
B) Changes to actual GDP
C) Changes to aggregate demand
D) All of the above.
10) Assume exports = 300, imports = 400, tax = 1100, government purchases = 1400,
private domestic saving = 900. Then the level of private domestic investment is
A) 500
B) 600
C) 700
D) 900
11) Assume you purchased a newly-built house, bought a used car, and bought some
government bonds. When calculating GDP, which of the following is true?
A) Investment went up since you purchased a newly-built house.
B) Investment went up since you bought government bonds.
C) Government purchases went up since you bought government bonds.
D) Consumption went up since you bought a new house and a used car.
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BSP2001 MACRO AND INTERNATIONAL ECONOMICS SEM 1 2015/2016
14) If nominal GDP decreased from $500 billion in the base year to $400 billion in the
following year and real GDP stayed the same, which is true?
A) Inflation decreased by approximately 20%.
B) Inflation decreased by approximately 25%.
C) Inflation decreased by approximately 80%.
D) Inflation remained unchanged.