Name: Class: Date: Exam 2 f2016 11am classIndicate the answer choice that best completes the statement or answers the question.1. When opening a print shop you need to buy printers, computers, furniture, and similar items. Economists call these expenditures a. investment in human capital. b. capital investment. c. business consumption expenditures. d. personal saving.2. Kathleen is considering expanding her dress shop. If interest rates rise she is a. more likely to expand. This illustrates why the demand for loanable funds slopes upward. b. more likely to expand. This illustrates why the supply of loanable funds slopes upward. c. less likely to expand. This illustrates why the demand for loanable funds slopes downward. d. less likely to expand. This illustrates why the supply of loanable funds slopes downward.Consider the exhibit below for the following questions.Figure 33-43. Refer to Figure 33-4. In the short run, a favorable shift in aggregate supply would move the economy from a. D to A. b. B to C. c. A to B. d. C to D.4. Stagflation exists when prices a. fall and unemployment rises. b. rise and unemployment falls. c. fall and unemployment Copyright Cengage Learning. Powered by Cognero. Page 1Name: Class: Date: Exam 2 f2016 11am classrises. d. rise and unemployment falls.5. Which of the following is not a determinant of the long-run level of real GDP? a. available technology b. available stock of human capital. c. the price level. d. the amount of capital used by firms.6. If the dollar depreciates because of speculation or government policy, U.S. a. aggregate demand shifts left. U.S. aggregate demand shifts right if other countries experience an increase in real GDP. b. aggregate demand shifts right. U.S. aggregate demand also shifts right if other countries experience a decrease in real GDP. c. aggregate demand shifts right. U.S. aggregate demand shifts left if other countries experience a decrease in real GDP. d. aggregate demand shifts left. U.S. aggregate demand also shifts left if other countries experience an increase inreal GDP.7. Which of the following statements concerning the aggregate demand and aggregate supply model is correct? a. The aggregate demand and aggregate supply model is nothing more than a large version of the model of market demand and supply. b. The price level and quantity of output adjust to bring aggregate demand and supply into balance. c. The aggregate supply curve shows the quantity of goods and services that households, firms, and the government want to buy at each price. d. All of the above are correct.8. The sticky-wage theory of the short-run aggregate supply curve says that when the price level rises more than expected, a. production is less profitable and employment rises. b. production is less profitable and employment falls. c. production is more profitable and employment rises. d. production is more profitable and employment falls.9. The primary economic function of the financial system is to a. provide expert advice to savers and investors. b. keep interest rates low. c. match one person’s consumption expenditures with another person’s capital expenditures. d. match one person’s saving with another person’s investment.10. If the supply of loanable funds shifts to the right, then the equilibrium interest rate a. and quantity of loanable funds rises. b. rises and the quantity of loanable funds falls.Copyright Cengage Learning. Powered by Cognero. Page 2Name: Class: Date: Exam 2 f2016 11am class c. and quantity of loanable funds falls. d. falls and the quantity of loanable funds rises.11. Suppose that in a closed economy GDP is equal to 15,000, government purchases are equal to 3,000, consumption equals 10,500, and taxes equal 3,500. What are private saving and public saving? a. 1,500 and 500, respectively b. 1,500 and -500, respectively c. 1,000 and 500, respectively d. 1,000 and -500, respectively12. The aggregate-demand curve shows the a. quantity of labor and other inputs that firms want to buy at each price level. b. quantity of labor and other inputs that firms want to buy at each inflation rate. c. quantity of domestically produced goods and services that households want to buy at each price level. d. quantity of domestically produced goods and services that households, firms, the government, and customers abroad want to buy at each price level.13. Crowding out occurs when investment declines because a. a budget surplus makes interest rates fall. b. a budget deficit makes interest rates rise. c. a budget surplus makes interest rates rise. d. a budget deficit makes interest rates fall.14. Other things the same, continued technological progress and continued increases in the money supply would unambiguously lead to a. rising prices only. b. rising real GDP only. c. rising prices and rising real GDP. d. neither rising prices nor rising real GDP.15. Other things the same, if prices fell when firms and workers were expecting them to rise, then a. employment and production would rise. b. employment would rise and production would fall. c. employment and production would fall. d. employment would fall and production would rise.Copyright Cengage Learning. Powered by Cognero. Page 3Name: Class: Date: Exam 2 f2016 11am class16. Other things the same, a higher interest rate induces people to a. save less, so the supply of loanable funds slopes downward. b. invest less, so the supply of loanable funds slopes downward. c. invest more, so the supply of loanable funds slopes upward. d. save more, so the supply of loanable funds slopes upward.17. Which of the following shifts aggregate demand to the right? a. Net exports fall. b. The Fed lowers interest rates. c. The price level falls. d. Congress reduces purchases of new weapons systems.Financial CrisisSuppose that banks are less able to raise funds and so lend less. Consequently, because people and households are less able to borrow, they spend less at any given price level than they would otherwise. The crisis is persistent so lending should remain depressed for some time.18. Refer to Financial Crisis. What happens to the price level and real GDP in the short run? a. the price level rises and real GDP falls b. both the price level and real GDP fall c. both the price level and real GDP rise d. the price level falls and real GDP rises19. Other things the same, when an economy increases its saving rate a. consumption rises now and production rises later b. consumption