MacroEco Exm 3

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jsun59
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187996
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MacroEco Exm 3
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2012-12-12 22:57:15
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Macroeconomics
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Aggregate Demand/Supply Curve, etc.
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  1. Most economists use the aggregate demand and aggregate supply mode primarily to analyze

    A.  short run fluctuations in the economy
    B.  the long -run effects of international trade policies
    C.  productivity and economic growth
    D.  the effects of macroeconomic policy on the prices of individual goods
    A.  short-fluctuations in the economy
    (this multiple choice question has been scrambled)
  2. The saying "Money is a veil." means that

    A.  while nominal variables are the first thing we may observe about an economy, what's important are the real variables and the forces that determine them
    B.  money is the principle medium of exchange in most economies
    C.  the primary determinant of short-run economic fluctuations is not real variables, but rather changes in the money supply
    D.  in the long run, money is of no importance to the determination of either real or nominal variables
    A.  while nominal variables are the first thing we may observe about about an economy, what's important are the real variables and the forces that determine them
    (this multiple choice question has been scrambled)
  3. 3.  The classical model is appropriate for analysis of the economy in the

    A.  short run, provided real and nominal variables are highly intertwined
    B.  short run, provided money is not neutral
    C.  long run, since evidence indicates that money is not neutral in the long run
    D.  long run, since real and nominal variables are essentially determined separately in the long run
    D.  long run, since real and nominal variables are essentially determined separately in the long run
    (this multiple choice question has been scrambled)
  4. Most economists believe that in the short run

    A.  real and nominal variables are determined independently and that money cannot move real GDP away from its long-run trend
    B.  real and nominal variables are determined independently but that money can temporarily move real GDP away from its long-run trend
    C.  real and nominal variables are highly intertwined but that money cannot move real GDP away from its long-run trend
    D.  real and nominal variables are highly intertwined and that money can temorarily move real GDP away from its long-run trend
    D.  real and nominal variables are highly intertwined and that money can temporarily move real GDP away from its long-run trend
    (this multiple choice question has been scrambled)
  5. Which of the following would not be included in aggregate demand?

    A.  the purchase of newly produced capital goods
    B.  additions of newly produced goods to inventory
    C.  purchases of U.S. services by foreigners
    D.  government transfer payments such as Social Security payments
    D.  government transfer payments such as Social Security payments
    (this multiple choice question has been scrambled)
  6. Other things the same, an increase in the price level induces people to hold

    A.  less money, so they lend more, and the interest rate falls
    B.  more money, so they lend less, and the interest rate rises
    C.  less money, so they lend less, and the interest rate rises
    D.  more money, so they lend more, and the interest rate falls
    B.  more money, so they lend less, and the interest rate rises
    (this multiple choice question has been scrambled)
  7. When the price level falls

    A.  Both A and B are correct
    B.  The interest rate falls because people will want to hold more money and so sell bonds
    C.  Firms will want to spend more on new business buildings and business equipment and households will want to spend more building hew homes
    d.  None of the above are correct
    C.  Firms will want to spend more on new business buildings and business equipment and households will want to spend more building new homes
    (this multiple choice question has been scrambled)
  8. Aggregate demand shifts left when the government

    A.  decreases taxes
    B.  cuts military expenditures
    C.  creates a new investment tax credit
    d.  None of the above is correct
    B.  cuts military expenditures
    (this multiple choice question has been scrambled)
  9. In 2009 Congress passed legislation providing states with funds to build roads and bridges.  It also instituted tax cuts.  Which of these shifts aggregate demand right?

    A.  neither the increased funding for states nor the tax cuts
    B.  only the tax cuts
    C.  only the increased funding for states
    D.  both the increased funding for states and the tax cuts
    D.  both the increased funding for states and the tax cuts
    (this multiple choice question has been scrambled)
  10. Which of the following shifts aggregate demand to the right?

    A.  an investment tax credit but not a decrease in income tax rates
    B.  both an investment tax credit and a decrease in income tax rates
    C.  a decrease in income tax rates but not an investment tax credit
    D.  neither an investment tax credit nor a decrease in income tax rates
    B.  both an investment tax credit and a decrease in income tax rates
    (this multiple choice question has been scrambled)
  11. For the U.S. economy, which of the following is the most important reason for the downward slope of the aggregate-demand curve?

    A.  the wealth effect
    B.  the exchange-rate effect
    C.  the real-wage effect
    D.  the interest-rate effect
    D.  the interest-rate effect
    (this multiple choice question has been scrambled)
  12. Which of the following is likely more important for explaining the slope of the aggregate-demand curve of a small economy than it is for the United States?

    A.  the interest-rate effect
    B.  the real-wage effect
    C.  the wealth effect
    D.  the exchange-rate effect
    D.  the exchange-rate effect
    (this multiple choice question has been scrambled)
  13. Which particular interest rate do we attempt to explain using the theory of liquidity preference?

    A.  only the interest rate on long-term bonds
    B.  only the interest rate on short-term government bonds
    C.  only the nominal interest rate
    D.  bothe the nominal interest rate and the real interest rate
    D.  both the nominal interest rate and the real interest rate
    (this multiple choice question has been scrambled)
  14. If expected inflation is constant, then when the nominal interest rate increases, the real interest rate

    A.  decreases by more than the change in the nominal interest rate
    B.  increases by more than the change in the nominal interest rate
    C.  increases by the change in the nominal interest rate
    D.  decreases by the change in the nominal interest rate
    C.  increases by the change in the nominal interest rate
    (this multiple choice question has been scrambled)
  15. Refer to 15 - Graph
  16. Refer to 16 - Graph
  17. Refer to 17 - Graph
  18. Refer to 18 - Graph
  19. In the long run, fiscal policy primarily affects

    A.  saving, investment, and growth.  In the short run, if affects primarily aggregate demand
    B.  saving, investment, and growth.  In the short run, it affects primarily aggregate supply
    C.  aggregate demand.  In the short run, it affects primarily aggregate supply
    D.  aggregate supply.  In the short run, it affects primarily saving, investment, and growth
    A.  saving, investment, and growth.  In the short run, it affects primarily aggregate demand
    (this multiple choice question has been scrambled)
  20. Fiscal policy refers to the idea that aggregate demand is affected by changes in

    A.  the money supply
    B.  government spending and taxes
    C.  trade policy
    d.  All of the above are correct
    B.  government spending and taxes
    (this multiple choice question has been scrambled)
  21. The marginal propensity to consume (MPC) is defined as the fraction of

    A.  total income that a household either consumes or saves
    B.  extra income that a household either consumes or saves
    C.  total income that a household consumes rather than saves
    D.  extra income that a household consumes rather than saves
    B.  extra income that a household consumes rather than saves
    (this multiple choice question has been scrambled)
  22. The economy goes into recession.  Which of the following lists contains lists things policymakers could do to try to end the recession?

    A.  increase the money supply, decrease taxes, increase government spending
    B.  decrease the money supply, increase taxes, decrease government spending
    C.  increase the money supply, increase taxes, increase government spending
    D.  increase the money supply, increase taxes, decrease government spending
    A.  increase the money supply, decrease taxes, increase government spending
    (this multiple choice question has been scrambled)
  23. Which of the following likely occurs when households and firms are pessimistic?

    A.  Real GDP rises
    B.  The unemployment rate increases
    C.  increased aggregate demand
    D.  increased spending
    B.  The unemployment rate increases
    (this multiple choice question has been scrambled)
  24. Suppose that the central bank must follow a rule that requires it to increase the money supply when the price level falls and decrease the money supply when the price level rises.  If the economy starts from long-run equilibrium and aggregate supply shifts left, the central bank must

    A.  decrease the money supply, which will move output farther from its long-run level
    B.  increase the money supply, which will move output farther from its long-run level
    C.  decrease the money supply, which will move output back towards its long-run level
    D.  increase the money supply, which will move output back towards its long-run level
    A.  decrease the money supply, which will move output farther from its long-run level
    (this multiple choice question has been scrambled)
  25. Which of the following rises during recession?

    A.  consumer spending but not layoffs
    B.  layoffs and consumer spending
    C.  neither layoffs nor consumer spending
    D.  layoffs but not consumer spending
    D.  layoffs but not consumer spending
    (this multiple choice question has been scrambled)
  26. In 2001, the United States was in recession.  Which of the following things would you not expect to have happened?

    A.  increased claimes for unemployment insurance
    B.  a higher rate of bankruptcy
    C.  increased investment spending
    D.  increased layoffs and firings
    C.  increased investment spending
    (this multiple choice question has been scrambled)
  27. The curve that shows the quantity of goods and services that firms produce and sell

    A.  as it relates to the quantity of goods and services that firms produce and sell
    B.  as it relates to the overall price level is called the aggregate-supply curve
    C.  as it relates to the overall price level is called the aggregate-demand curve
    D.  as it relates to the quantity of goods and services that buyers want to buy is called the aggregate-supply curve
    B.  as it relates to the overall price level is called the agregate-supply curve
    (this multiple choice question has been scrambled)
  28. Which of the following adjust to bring aggregate supply and demand into balance?

    A.  the saving rate and net exports
    B.  government expenditures and taxes
    C.  the price level and real output
    D.  the real rate of interest and the money supply
    C.  the price level and real output
    (this multiple choice question has been scrambled)
  29. Other things the same, as the price level falls,

    A.  people feel less wealthy
    B.  the interest rate rises
    C.  the dollar depreciates
    d.  All of the above are correct
    C.  the dollar depreciates
    (this multiple choice question has been scrambled)
  30. Other things the same, as the price level rises,

    A.  people feel less wealthy
    B.  the interest rate falls
    C.  the dollar depreciates
    d.  All of the above are correct
    A.  people feel less wealthy
    (this multiple choice question has been scrambled)
  31. Part of the explanation for why the aggregate-demand curve slopes downward is that a decrease in the price level

    A.  decreases the real value of money
    B.  increases the real value of the dollar in foreign exchange markets
    C.  decreases the interest rate
    d.  All of the above are correct
    C.  decreases the interest rate
    (this multiple choice question has been scrambled)
  32. Which of the following would both shift aggregate demand right?

    A.  the price level decreases and government expenditures increase
    B.  the price level decreases and the government repeals an investment tax credit
    C.  government expenditures increase and the money supply increases
    d.  None of the above are correct
    C.  government expenditures increase and the money supply increases
    (this multiple choice question has been scrambled)
  33. Which of the following both shift aggregate demand right?

    A.  net exports rise for some reason other than a price change and the price level rises
    B.  net exports fall for some reason other than a price change and the price level rises
    C.  net exports rise for some reason other than a price change and the money supply rises
    D.  net exports fall for some reason other than a price change and the money supply rises
    C.  net exports rise for some reason other than a price change and the money supply rises
    (this multiple choice question has been scrambled)
  34. Aggregate demand shifts right if

    A.  taxes fall and shifts left if stock prices rise
    B.  taxes rise and shifts left if stock prices fall
    C.  taxes fall and shifts left if stock prices fall
    D.  taxes rise and shifts left if stock prices rise
    C.  taxes fall and shifts left if stock prices fall
    (this multiple choice question has been scrambled)
  35. Aggregate demand shifts left if

    A.  taxes rise and shifts left if stock prices fall
    B.  taxes fall and shifts left if stock prices fall
    C.  taxes fall and shifts left if stock prices rise
    D.  taxes rise and shifts left if stock prices rise
    A.  taxes rise and shifts left if stock prices fall
    (this multiple choice question has been scrambled)
  36. Which of the following claims concerning the importance of effects that explain the slope of the U.S. aggregate-demand curve is correct?

    A.  The exchange-rate effect is relatively small because exports and imports are a small part of real GDP
    B.  The interest-rate effect is relatively small because investment spending is not very responsive to interest rate changes
    C.  The wealth effect is relatively large because money holdings are a significant portion of most households' wealth
    d.  None of the above is correct
    A.  The exchange-rate effect is relatively small because exports and imports are a small part of real GDP
    (this multiple choice question has been scrambled)
  37. According to John Maynard Keynes,

    A.  the interest rate adjusts to balance the supply of, and demand for, money
    B.  the interest rate adjusts to balance the supply of, and demand for, goods and services
    C.  the supply of money in a country is determined by the overall wealth of the citizens of that country
    D.  the demand for money in a country is determined entirely by that nation's central bank
    A.  the interest rate adjusts to balance the supply of, and demand for, money
    (this multiple choice question has been scrambled)
  38. Monetary policy

    A.  must be described in terms of money-supply targets
    B.  cannot be accurately described in terms of the interest rate or in terms of the money supply
    C.  can be described either in terms of the money supply or in terms of the interest rate
    D.  must be described in terms of interest-rate targets
    C.  can be described either in terms of the money supply or in terms of the interest rate
    (this multiple choice question has been scrambled)
  39. The opportunity cost of holding money

    A.  decreases when the interest rate increases, so people desire to hold more of it
    B.  increases when the interest rate increases, so people desire to hold less of it
    C.  decreases when the interest rate increases, so people desire to hold less of it
    D.  increases when the interest rate increases, so people desire to hold more of it
    B.  increases when the interest rate increases, so people desire to hold less of it
    (this multiple choice question has been scrambled)
  40. See Graph
  41. See Graph
  42. See Graph
  43. The multiplier for changes in government spending is calculated as

    A.  1/(1-MPC)
    B.  MPC/(1-MPC)
    C.  1/MPC
    D.  (1-MPC)/MPC
    A.  1/(1-MPC)
    (this multiple choice question has been scrambled)
  44. If the MPC = 3/5, then the government purchases multiplier is

    A.  5/3
    B.  15
    C.  5/2
    D.  5
    C.  5/2
    (this multiple choice question has been scrambled)
  45. The principal lag for monetary policy

    A.  is the time it takes for policy to change spending.  The principal lag for fiscal policy is the time it takes to implement it
    B.  and fiscal policy is the time it takes to implement policy
    C.  is the time it takes to implement policy.  The principal lag for fiscal policy is the time it takes for policy to change spending
    D.  and fiscal policy is the time it takes for policy to change spending
    A.  is the time it takes for policy to change spending.  The principal lag for fiscal policy is the time it takes to implement it
    (this multiple choice question has been scrambled)
  46. The principal reason that monetary policy has lags is that it takes a long time for

    A.  changes in the interest rate to change aggregate demand
    B.  the federal government to change the tax code
    C.  the Fed to make changes in policy
    D.  changes in the money supply to change interest rates
    A.  changes in the interest rate to change aggregate demand
    (this multiple choice question has been scrambled)
  47. Opponents of using policy to stabilize the economy generally believe that

    A.  unemployment and inflation are not cause for much concern
    B.  economic conditions can easily change between the start of policy action and when it takes effect
    C.  attempts to stabilize the economy decrease the magnitude of economic fluctuations
    D.  neither fiscal nor monetary policy have much impact on aggregate demand
    B.  economic conditions can easily change between the start of policy action and when it takes effect
    (this multiple choice question has been scrambled)
  48. Which of the following is correct?

    A.  Economic forecasts are precise and aggregate spending responds almost immediately to interest rate changes
    B.  Economic forecasts are precise and aggregate spending responds to interest rate changes with a lag
    C.  Economic forecast are imprecise and aggregate spending responds to interest rate changes with a lag
    D.  Economic forecasts are imprecise and aggregate spending responds almost immediately to interest rate changes
    C.  Economic forecast are imprecise and aggregate spending responds to interest rate changes with a lag
    (this multiple choice question has been scrambled)
  49. Means-tested government benefits base benefits on

    A.  the current interest rate and are an incentive to save
    B.  the current interest rate and are a disincentive to save
    C.  a household's wealth and are an incentive to save
    D.  a household's wealth and are a disincentive to save
    D.  a household's wealth and are a disincentive to save
    (this multiple choice question has been scrambled)

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