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1) In an open economy model, which of the following will shift the domestic economy's IS curve to the right? A) A decrease in the desired investment in the domestic economy B) An increase in the domestic saving rate C) A decrease in foreign output D) An increase in demand for domestic goods relative to foreign goods. 2) Which of the following would likely occur following an increase in government spending? (Assume that Ricardian Equivalence is incorrect.) A) A decrease in money demand causing the LM curve to shift left. B) An increase in saving causing the IS curve to shift left. C) An increase in money demand causing a shift in the LM curve to the right. D) A decrease in saving causing the IS curve to shift right. 3)Which of the following is not true concerning the US social security system? A) The amount of contributions to social security has recently been less than the amount needed for retirement benefits, causing the social security trust fund to decline. B) The money currently contributed to social security is used to pay benefits for individuals currently receiving Social Security. C) The money you contribute to social security is invested in an account specifically for your retirement. 4) Which of the following is not part of the reasoning from David Ricardo when he discussed the idea now called Ricardian equivalence? A) A temporary decrease in taxes financed by borrowing will not cause a shift in the IS or AD curves. B) An increase in government spending financed by borrowing will cause the level of aggregate demand to increase. C) Consumers will save money they get today from a tax decrease to pay for future tax increases; therefore, the tax decrease does not increase consumption

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