Question

(1)

Other things being equal, which of the following will most likely occur in the United States as the result of an unexpected economic slowdown in Canada and Mexico?

Group of answer choices

an increase in aggregate demand and output in the short run

an reduction in aggregate demand and output in the short run

an increase in the price level

a decrease in the natural rate of unemployment in the United States

(2)

A leftward shift in the demand curve for tennis balls could be caused by

Group of answer choices

a rise in the price of tennis balls.

a fall in the price of tennis rackets.

a rise in the price of tennis lessons.

an increase in income, assuming tennis balls are a normal good.

(3)

​Country A and Country B initially have the same real GDP per capita. Country A experiences no economic growth, while Country B grows at a sustained rate of 4 percent. In 36 years, Country A's GDP will be approximately ____ that of Country B.

Group of answer choices

​one-fourth

​one-half

​double

​triple

(4)

On a supply-and-demand diagram, consider a price for which the horizontal distance to the demand curve exceeds the horizontal distance to the supply curve. There is a __________ at that price and the current price must be __________ the equilibrium price.

Group of answer choices

shortage; above

shortage; below

surplus; above

surplus; below

Answer 1

1) Other things being equal, if there is an unexpected economic slowdown in Canada and Mexico, these countries will reduce their demand for goods and services produced in the U.S. As a result exports of U.S will fall and aggregate demand will fall leading to fall in output in the short run. Hence the answer is option (b).

2) A leftward shift in the demand curve for tennis balls indicates fall in demand. Fall in demand can be caused when price of complementary goods increases, income falls and price of substitute goods falls. Here tennis balls, tennis rackets and tennis lessons are complementary goods. Thus a rise in the price of tennis lessons leads to fall in demand for tennis balls. Changes in price of tennis balls only causes movement along the demand curve. Hence the answer is option (c).