merged

___ 3. DEF Company can invest in new machinery which costs $500,000 and will generate
additional annual profits of $40,000. The rate of return is:
a. $40,000
b. 12.5%
c. 8%
d. 4%
___ 4. Investment spending will increase if:
a. businesses become more optimistic about future returns
b. interest rates increase
c. Both of the above
d. Neither of the above
___ 5. If the federal government increases its spending on the interstate highway system:
a. Total Expenditures will decrease
b. Total Expenditures will increase
c. Aggregate demand will increase
d. Both b. and c. above
___ 6. Net exports will increase if:
a. there is an increase in foreign Real GDP
b. the exchange rate for the dollar depreciates
c. Both of the above
d. Neither of the above
___ 7. Which of the following will cause net exports to increase?
a. the U.S. dollar appreciates versus the Canadian dollar
b. the economy of Canada grows rapidly
c. Both of the above
d. Neither of the above
___ 8. A decrease in aggregate demand could be caused by:
a. an increase in tax rates that decreases disposable income
b. an increase in interest rates that decreases investment
c. an appreciation in the exchange rate for the dollar that decreases net exports
d. All of the above
___ 9. The short-run aggregate supply curve shifts in response to a change in:
a. wage rates
b. consumption
c. net exports
d. All of the above
___ 10. A decrease in short-run aggregate supply could be caused by:
a. an increase in wage rates
b. a decrease in the prices of nonlabor inputs
c. an increase in productivity
d. All of the above
___ 11. An adverse supply shock would cause:
a. AD to increase, leading to a higher price level
b. AD to decrease, leading to a lower price level
c. SRAS to decrease, leading to a higher price level
d. SRAS to increase, leading to a lower price level
FOR REVIEW ONLY - NOT FOR DISTRIBUTION
6 - 11 The Aggregate Market