Question : 31) If people’s expectations about future income improve so they : 1240520

31) If people’s expectations about future income improve so they think their future income will be higher than previously believed, then the AD curve

A) will not change until income actually rises.

B) will shift leftward because people will spend less now.

C) will shift rightward because people will increase spending now.

D) and the AS curve will both shift leftward because people will increase their saving.

E) will not shift, but potential GDP will increase.

32) If firms’ expectations about the future become pessimistic so that they think future profits will be lower, then

A) aggregate demand decreases and the AD curve shifts leftward.

B) aggregate demand increases and the AD curve shifts rightward.

C) the quantity of real GDP demanded decreases, and there is a movement up along the AD curve.

D) the quantity of real GDP demanded increases, and there is a movement down along the AD curve.

E) the aggregate demand curve does not shift, but potential GDP decreases.

33) Which of the following decreases aggregate demand and shifts the AD curve leftward?

A) a tax cut

B) a decrease in price level

C) a decrease in government expenditures

D) a decrease in the price of exported goods and services

E) a decrease in potential GDP

34) An increase in government expenditure on goods and services leads to the

A) aggregate supply curve shifting rightward.

B) aggregate supply curve shifting leftward.

C) aggregate demand curve shifting rightward.

D) aggregate demand curve shifting leftward.

E) potential GDP increasing.

35) Aggregate demand ________ and shifts the AD curve ________ when ________.

A) increases; rightward; government expenditure increases

B) increases; rightward; taxes increase

C) increases; rightward; future expected profit decreases

D) decreases; leftward; foreign income increases

E) increases; leftward; government expenditure increases

36) A tax increase

A) decreases aggregate demand and the AD curve shifts leftward.

B) increases aggregate demand and the AD curve shifts rightward.

C) decreases the quantity of real GDP demanded and there is a movement up along the AD curve.

D) increases the quantity of real GDP demanded and there is a movement down along the AD curve.

E) does not shift or lead to a movement along the aggregate demand curve.

37) Which of the following shifts the aggregate demand curve rightward?

A) a decrease in expected future income

B) a decrease in the price level

C) a tax cut

D) a decrease in the quantity of money

E) a decrease in government expenditures on goods and services

38) A tax cut ________ aggregate demand and ________.

A) decreases; shifts the AD curve rightward

B) increases; shifts the AD curve leftward

C) increases; shifts the AD curve rightward

D) decreases; shifts the AD curve leftward

E) does not change; does not shift the AD curve

39) Which of the following statements is correct?

A) An increase in people’s expected future income shifts the aggregate demand curve leftward.

B) A tax increase shifts the aggregate demand curve leftward.

C) An increase in potential GDP shifts the aggregate demand curve rightward.

D) An increase in exports shifts the aggregate demand curve leftward.

E) The higher the price level, the larger is the quantity of real GDP demanded.

40) If taxes are cut, there is

A) an increase in aggregate demand and the AD curve shifts rightward.

B) a decrease in aggregate demand and the AD curve shifts leftward.

C) an increase in the quantity of real GDP demanded and a movement up along the AD curve.

D) a decrease in the quantity of real GDP demanded and a movement down along the AD curve.

E) no change in aggregate demand, only a change in potential GDP.