SOLVED

 1) Which equation is a plausible aggregate demand curve? A) Ï€ = 2 + 0.3Y B) Y = 50 – 1.25Ï€ C) Y = 250 – 80r D) Ï€ = 5 – 0.4 (U – 6) E) none of the above 2) The endogenous variable in the aggregate demand curve is ________. A) the real interest rate B) output C) inflation D) planned expenditure E) none of the above 3) Rising inflation causes quantity demanded to decline, because ________. A) the central bank raises the nominal interest rate by more than the increase in expected inflation B) households and businesses are reluctant to spend when prices rise C) higher inflation causes the IS curve to shift to the left D) all of the above E) none of the above 4) The aggregate demand curve has a negative slope, because households and businesses respond to an increase in ________ by reducing their expenditures. A) the inflation rate B) output C) the real interest rate D) all of the above E) none of the above 5) If the Federal Reserve raises the real interest rate for any given inflation rate ________. A) investment spending would increase B) it would lead to higher consumption spending and net exports C) the aggregate demand curve would shift to the left D) all of the above E) none of the above 6) The aggregate demand curve shifts to the left when there is ________. A) autonomous tightening of monetary policy B) an increase in the nominal interest rate C) an increase in inflation D) all of the above E) none of the above 7) The aggregate demand curve shifts to the right when there is ________. A) a negative price shock B) a decrease in the nominal interest rate C) a decrease in inflation D) all of the above E) none of the above 8) If for any given inflation rate, the federal government lowered taxes, ________. A) it would have a similar qualitative result on output as an increase in government purchases B) it would raise disposable income leading to higher consumption spending C) the aggregate demand curve would shift to the right D) all of the above E) none of the above 9) An autonomous increase in net exports for any given inflation rate ________. A) would add directly to planned expenditures B) would raise the equilibrium level of output C) the aggregate demand curve would shift to the right D) all of the above E) none of the above 10) If consumers suddenly became more optimistic ________. A) they would spend more at any given inflation rate B) planned expenditures would decline C) the aggregate demand curve would shift to the left D) all of the above E) none of the above 1