Consider the Following News Headline: "China Signs Deal to Buy

question 35

Multiple Choice

Consider the following news headline: "China signs deal to buy more Canadian wheat." Assuming that aggregate output is demand-determined,what effect will this have,all other things equal,on the AE function and on equilibrium national income?

• A)The AE function will shift down parallel to itself,and equilibrium national income will fall.
• B)The AE function will rotate upward (become steeper),and equilibrium national income will rise.
• C)The AE function will rotate downward (become flatter),and national income will fall.
• D)The AE function will shift up parallel to itself,and equilibrium national income will rise.
• E)There will be no change in the AE function or in equilibrium national income.

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Definitions:

Predictive Validity

The degree to which a result from a test or scale forecasts future results in a related area.

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Thematic Apperception Test

A projective psychological test that asks respondents to interpret ambiguous images, used to explore their emotions, thoughts, and attitudes.