question
The sticky-wage theory of the short-run aggregate supply curve says that when the price level rises more than expected...
a. Production is more profitable and employment rises.
b. Production is less profitable and employment rises.
c. Production is less profitable and employment falls.
d. Production is more profitable and employment falls.
a. Production is more profitable and employment rises.
b. Production is less profitable and employment rises.
c. Production is less profitable and employment falls.
d. Production is more profitable and employment falls.
answer
a. Production is more profitable and employment rises.
question
If the real interest rate were above the equilibrium rate, there would be a surplus of loanable funds.
a. True
b. False
a. True
b. False
answer
a. True
question
Open market purchases by the Fed makes the money supply...
a. decrease, which makes the value of money decrease.
b. increase, which makes the value of money increase.
c. decrease, which makes the value of money increase.
d. increase, which makes the value of money decrease.
a. decrease, which makes the value of money decrease.
b. increase, which makes the value of money increase.
c. decrease, which makes the value of money increase.
d. increase, which makes the value of money decrease.
answer
d. increase, which makes the value of money decrease.
question
According to purchasing-power parity, if the Fed increased the money supply...
a. US prices would rise and the nominal exchange rate would fall.
b. US prices would rise and the nominal exchange rate would rise.
c. US prices and the nominal exchange rate would fall.
d. US prices would fall and the nominal exchange rate would rise.
a. US prices would rise and the nominal exchange rate would fall.
b. US prices would rise and the nominal exchange rate would rise.
c. US prices and the nominal exchange rate would fall.
d. US prices would fall and the nominal exchange rate would rise.
answer
a. US prices would rise and the nominal exchange rate would fall.
question
When we say that economic fluctuations are "irregular and unpredictable," we mean that...
a. Recessions don't occur at regular intervals.
b. When one macroeconomic variable that measures income/spending is falling, other macroeconomic variables that measure income/spending are likely to be rising.
c. The relationship between output and unemployment us erratic and difficult to characterize.
d. All of the above are correct.
a. Recessions don't occur at regular intervals.
b. When one macroeconomic variable that measures income/spending is falling, other macroeconomic variables that measure income/spending are likely to be rising.
c. The relationship between output and unemployment us erratic and difficult to characterize.
d. All of the above are correct.
answer
a. Recessions don't occur at regular intervals.
question
When a government increases its budget deficit, then that country's...
a. Supply of loanable funds shifts right.
b. Demand for loanable funds shifts right.
c. Demand for loanable funds shifts left.
d. Supply of loanable funds shifts left.
a. Supply of loanable funds shifts right.
b. Demand for loanable funds shifts right.
c. Demand for loanable funds shifts left.
d. Supply of loanable funds shifts left.
answer
d. Supply of loanable funds shifts left.
question
In 1936, John Maynard Keynes published a book, The General Theory, which attempts to explain...
a. The classical dichotomy.
b. How changes in the money supply created the Great Depression.
c. Short-run economic fluctuations.
d. Stagflation
a. The classical dichotomy.
b. How changes in the money supply created the Great Depression.
c. Short-run economic fluctuations.
d. Stagflation
answer
c. Short-run economic fluctuations.
question
In the open-economy macroeconomic model, the key determinant of net capital outflow is...
a. The real exchange rate. When the real exchange rate rises, net capital outflow falls.
b. The real exchange rate. When the real exchange rate rises, net capital outflow rises.
c. The real interest rate. When the real interest rate rises, net capital outflow rises.
d. The real interest rate. When the real interest rate rises, net capital outflow falls.
a. The real exchange rate. When the real exchange rate rises, net capital outflow falls.
b. The real exchange rate. When the real exchange rate rises, net capital outflow rises.
c. The real interest rate. When the real interest rate rises, net capital outflow rises.
d. The real interest rate. When the real interest rate rises, net capital outflow falls.
answer
d. The real interest rate. When the real interest rate rises, net capital outflow falls.
question
When the US real interest rate falls, purchasing US assets becomes...
a. Less attractive and so US net capital outflow rises.
b. Less attractive and so US net capital outflow falls.
c. More attractive and so US net capital outflow rises.
d. More attractive and so US net capital outflow falls.
a. Less attractive and so US net capital outflow rises.
b. Less attractive and so US net capital outflow falls.
c. More attractive and so US net capital outflow rises.
d. More attractive and so US net capital outflow falls.
answer
a. Less attractive and so US net capital outflow rises.
question
The wealth effect, interest-rate effect, and exchange-rate effect are all explanations for...
a. Everything that makes the aggregate demand curve shift.
b. The slope of short-run aggregate supply.
c. The slope of the aggregate demand curve.
d. The slope of long-run aggregate supply.
a. Everything that makes the aggregate demand curve shift.
b. The slope of short-run aggregate supply.
c. The slope of the aggregate demand curve.
d. The slope of long-run aggregate supply.
answer
c. The slope of the aggregate demand curve.
question
If prices in the US rise faster than prices in the UK, then according to the doctrine of purchasing-power parity, the US nominal exchange rate should rise.
a. True
b. False
a. True
b. False
answer
b. False
question
Which of the following would help explain why the aggregate demand curve slopes downward?
a. A lower price level causes domestic interest rates to rise and the real exchange rate to appreciate, which stimulates spending on net exports.
b. A higher price level increases real wealth, which stimulates spending on consumption.
c. A lower price level reduces the interest rate, which encourages greater spending on investment goods.
d. An unexpectedly low price level raise the real wage, which causes firms to hire fewer workers and produce a smaller quantity of goods and services.
a. A lower price level causes domestic interest rates to rise and the real exchange rate to appreciate, which stimulates spending on net exports.
b. A higher price level increases real wealth, which stimulates spending on consumption.
c. A lower price level reduces the interest rate, which encourages greater spending on investment goods.
d. An unexpectedly low price level raise the real wage, which causes firms to hire fewer workers and produce a smaller quantity of goods and services.
answer
c. A lower price level reduces the interest rate, which encourages greater spending on investment goods.
question
Other things the same, an increase in the US interest rate...
a. Lowers NCO which decreases the quantity of loanable funds demanded.
b. Lowers NCO which increases the quantity of loanable funds demanded.
c. Raises NCO which decreases the quantity of loanable funds demanded.
d. Raises NCO which increases the quantity of loanable funds demanded.
a. Lowers NCO which decreases the quantity of loanable funds demanded.
b. Lowers NCO which increases the quantity of loanable funds demanded.
c. Raises NCO which decreases the quantity of loanable funds demanded.
d. Raises NCO which increases the quantity of loanable funds demanded.
answer
a. Lowers NCO which decreases the quantity of loanable funds demanded.
question
In the open-economy macroeconomic model, which of the following increases NCO?
a. Both a fall in the real exchange rate and a fall in the real interest rate.
b. A fall in the real exchange rate, but not a fall in the real interest rate.
c. A fall in the the real interest rate, but not a fall in the real exchange rate.
d. Neither a fall in the the real exchange rate, nor a fall in the real interest rate.
a. Both a fall in the real exchange rate and a fall in the real interest rate.
b. A fall in the real exchange rate, but not a fall in the real interest rate.
c. A fall in the the real interest rate, but not a fall in the real exchange rate.
d. Neither a fall in the the real exchange rate, nor a fall in the real interest rate.
answer
c. A fall in the the real interest rate, but not a fall in the real exchange rate.
question
If speculators bid up the value of the US dollar in the market for foreign exchange, then...
a. US goods become more expensive relative to foreign goods, so aggregate demand shifts left.
b. US goods become less expensive relative to foreign goods, so aggregate demand shifts left.
c. US goods become more expensive relative to foreign goods, so aggregate demand shifts right.
d. US goods become less expensive relative to foreign goods, so aggregate demand shifts right.
a. US goods become more expensive relative to foreign goods, so aggregate demand shifts left.
b. US goods become less expensive relative to foreign goods, so aggregate demand shifts left.
c. US goods become more expensive relative to foreign goods, so aggregate demand shifts right.
d. US goods become less expensive relative to foreign goods, so aggregate demand shifts right.
answer
a. US goods become more expensive relative to foreign goods, so aggregate demand shifts left.
question
A country has a trade deficit. Which of the following must also be true?
a. NCO is negative and Saving is larger than Domestic Investment.
b. NCO is negative and Domestic Investment is larger than Saving.
c. NCO is positive and Domestic Investment is larger than Saving.
d. NCO is positive and Saving is larger than Domestic Investment.
a. NCO is negative and Saving is larger than Domestic Investment.
b. NCO is negative and Domestic Investment is larger than Saving.
c. NCO is positive and Domestic Investment is larger than Saving.
d. NCO is positive and Saving is larger than Domestic Investment.
answer
b. NCO is negative and Domestic Investment is larger than Saving.
question
If a country were to save more, but its domestic investment remained the same, then which of the following would rise?
a. Both NCO and Net Exports.
b. Net Exports but not NCO.
c. NCO but not Net Exports.
d. Neither Net Exports nor NCO.
a. Both NCO and Net Exports.
b. Net Exports but not NCO.
c. NCO but not Net Exports.
d. Neither Net Exports nor NCO.
answer
a. Both NCO and Net Exports.
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
