Reference no: EM13150311

Q1. If total production is less than total expenditures, then business firms a. have overproduced. b. will cut back on production. c. will raise production. d. will experience increases in inventory. Q2. Minimum wage laws cause unemployment because the legal minimum wage is set a. below the market wage, causing labor demand to be greater than labor supply. b. below the market wage, causing labor demand to be less than labor supply. c. above the market wage, causing labor demand to be greater than labor supply. d. above the market wage, causing labor demand to be less than labor supply Base year(2004) (2009) Product Quantity Price Quantity Price Meat 100 $10 120 $12 Potatoes 200 2 180 3 Q3.. Refer to Table above: Assume the market basket for the consumer price index has two products meat and potatoes with the following values in 2004 and 2009 for price and quantity: The Consumer Price Index for 2009 equals a. 125. b. 129. c. 135. d. 141. Q4. If firms find that consumers are purchasing more than expected, which of the following would you expect? a. Aggregate expenditure will likely be greater than GDP. b. Aggregate expenditure will likely be less than GDP. c. The economy will adjust to macroeconomic equilibrium as inventories rise, and production and employment fall. d. The economy will adjust to macroeconomic equilibrium as inventories fall, and production and employment fall. Q5. If the tax multiplier is -1.5 and a $200 billion tax increase is implemented, what is the change in GDP, holding everything else constant? (Assume the price level stays constant.) a. a $300 billion decrease in GDP b. a $300 billion increase in GDP c. a $30 billion increase in GDP d. a $133.33 billion decrease in GDP