Question :
16.4 Chapter Figures
The figure above shows a nation’s aggregate demand : 1228003
16.4 Chapter Figures
The figure above shows a nation’s aggregate demand curve, aggregate supply curve, and potential GDP.
1) In the figure above, the ________ gap is one trillion dollars. To close the gap, the government can change expenditure by ________ one trillion dollars.
A) recessionary; less than
B) inflationary; exactly
C) inflationary; more than
D) recessionary; more than
E) recessionary; exactly
2) In the figure above, the ________ gap is equal to ________.
A) recessionary; $1 trillion
B) inflationary; $1 trillion
C) recessionary; $12 trillion
D) inflationary; $12 trillion
E) recessionary; $13 trillion
3) In the figure above, the ________ gap is one trillion dollars. To close the gap, the government can ________ government expenditure and/or ________ taxes.
A) recessionary; increase; decrease
B) inflationary; decrease; increase
C) inflationary; increase; increase
D) recessionary; decrease; decrease
E) recessionary; decrease; increase
4) In the figure above, the ________ gap is one trillion dollars. To close the gap, the government can ________ government expenditure and/or ________ taxes.
A) recessionary; increase; decrease
B) inflationary; decrease; increase
C) inflationary; increase; increase
D) recessionary; decrease; decrease
E) recessionary; decrease; increase
5) In the figure above, to use fiscal policy to move the economy back to potential GDP, the government must increase government expenditure by ________ $1 trillion and/or decrease taxes by ________ $1 trillion.
A) recessionary; exactly; exactly
B) inflationary; less than; less than
C) recessionary; less than; more than
D) recessionary; less than; less than
E) recessionary; more than; more than
The figure above shows an economy aggregate demand curve and aggregate supply curves.
6) Suppose the shift from AD0 to AD1 and from AS0 to AS1 is the result of fiscal policy. Which of the policies below could lead to these shifts?
i.An increase in government expenditure
ii.A tax cut
iii.A decrease in government expenditure
iv.A tax hike
A) i only
B) iv only
C) i and ii
D) iii and iv
E) i and iv
7) Suppose the shift from AD0 to AD1 and from AS0 to AS1 is the result of fiscal policy. If the effect on aggregate supply was larger than the figure above shows, as a result the price level would be ________ 110 and real GDP would be ________ $14 trillion.
A) equal to; equal to
B) higher than; larger than
C) smaller than; larger than
D) equal to; larger than
E) smaller than; less than
8) Suppose the shift from AD0 to AD1 and from AS0 to AS1 is the result of fiscal policy. If the effect on aggregate demand was larger than the figure above shows, as a result the price level would be ________ 110 and real GDP would be ________ $14 trillion.
A) equal to; equal to
B) higher than; larger than
C) smaller than; larger than
D) equal to; larger than
E) smaller than; less than
The figure above shows a labor market with an income tax.
9) According to the figure above, if there is no income tax, the equilibrium real wage rate is ________ and the equilibrium hours of labor are ________.
A) $20; 200 billion
B) $30; 250 billion
C) $35; 200 billion
D) $30; 200 billion
E) The equilibrium is not shown.
10) In tax wedge in the figure above is equal to ________ per hour, which creates an after-tax real wage rate of ________ per hour and employment of ________ billion hours per year.
A) $10; $35; 250
B) $15; $20; 200
C) $10; $35; 200
D) $5; $35; 200
E) $15; $30; 250
11) In the figure above, the tax wedge is equal ________ per hour, the after-tax real wage rate is equal to ________, and the before-tax real wage rate is equal to ________.
A) $10; $30; $30
B) $15; $20; $35
C) $20; $30; $35
D) $20; $30; $20
E) $30; $20; $35
