Question : 51) Suppose the exchange rate in the year 2010 was : 1238116

51) Suppose the exchange rate in the year 2010 was 4 yuan per dollar and in 2011 the exchange rate fell to 3 yuan per dollar. If the price of a Chinese sweater was 120 yuan in both years, the new dollar price in 2011 would be ________ and imports of Chinese sweaters would ________.

A) $40; increase

B) $30; decrease

C) $40; decrease

D) $30; increase

E) $40; stay the same because the price stayed the same at 120 yuan

52) In the figure above, as the price level increases, the aggregate demand curve will

A) shift from AD1 to AD3.

B) shift from AD1 to AD2.

C) not shift, but the aggregate demand curve will change so that it is positively sloped.

D) not shift.

E) shift from AD1 to AD3 and then back to AD1.

53) In the figure above, the shift in the aggregate demand curve from AD1 to AD2 could be result of

A) a fall in the price level.

B) a decrease in the quantity of money.

C) an increase in government expenditures on goods and services.

D) an increase in taxes.

E) a rise in the price level.

54) In the figure above, the shift in the aggregate demand curve from AD1 to AD3 could be the result of

A) a decrease in the real interest rate.

B) a decrease in the buying power of money.

C) an increased expectation of a recession that lowers the expected rate of profit from investment.

D) a decrease in the foreign exchange rate.

E) an increase in the price level.

55) In the figure above, the shift in the aggregate demand curve from AD1 to AD3 could be the result of

A) a fall in the price level.

B) a tax cut.

C) an increased expectation of a recession that lowers people’s expected future incomes.

D) a decrease in the foreign exchange rate.

E) a rise in the price level.

56) In the figure above, the shift in the aggregate demand curve from AD1 to AD3 could be the result of an increase in

A) expected future income.

B) the foreign exchange rate.

C) foreign incomes.

D) the price level.

E) aggregate supply.

57) A change in any component of aggregate demand creates a larger change in overall aggregate demand. This is the ________ effect, and it means, for example, that a(n) ________ in consumption will cause an even larger ________ in AD.

A) multiplier; increase; increase

B) liquidity; decrease; decrease

C) growth; increase; decrease

D) multiplier; decrease; decrease

E) liquidity; increase; increase

58) The aggregate demand multiplier effect says that an initial increase in expenditure plans leads to an induced

A) increase in consumption expenditure.

B) increase in production expenditure.

C) increase in government expenditures on goods and services.

D) decrease in the price level.

E) increase in exports.

59) Because of the existence of the aggregate demand multiplier, a $10 billion change in expenditure

A) shifts the aggregate demand curve by more than $10 billion.

B) shifts the aggregate demand curve by $10 billion.

C) shifts the aggregate demand curve by less than $10 billion.

D) changes the slope of the aggregate demand curve so it is less steep.

E) changes the slope of the aggregate demand curve so it is steeper.

60) If investment spending increases by $1 million, then the aggregate demand curve shifts

A) rightward by $1 million.

B) rightward by more than $1 million.

C) rightward by less than $1 million.

D) leftward by more than $1 million.

E) leftward by less than $1 million.