Question 1
The __________ is the amount by which a change in autonomous expenditures is multiplied in order to determine the change in equilibrium expenditure that it generates.
marginal tax rate
marginal multiplier
expenditure reducer
expenditure multiplier
Question 2
When the Federal Reserve changes the quantity of money and the interest rate, it influences aggregate demand by using __________.
the world economy
consumer expectations
monetary policy
fiscal policy
Question 3
The change in equilibrium expenditure also equals the change in __________.
the potential GDP
the real GDP
income taxes
interest rates
Question 4 0 / 2.5 points
What represents the relationship between the quantity of real GDP supplied and the price level when all other influences on production plans remain the same?
aggregate demand
aggregate supply
the money wage rate
the money price index
Question 5
When the real GDP increases, disposable income and consumption expenditure __________.
do not change
become inverted
decrease
increase
Question 6
All other things remaining the same, the lower the price level, the __________ the quantity of real GDP demanded.
smaller
greater
more constant
less constant
Question 7
When the price level increases, the real interest rate __________.
is not affected
falls
rises
will rise or fall depending on demand
Question 8
If the price level from the GDP price index falls, what happens to the quantity of real GDP supplied?
it remains constant
it increases
it decreases
it barely changes
Question 9
What represents the relationship between the quantity of real GDP demanded and the price level when all other influences on expenditure plans remain the same?
aggregate demand
aggregate supply
the money wage rate
the money price index
Question 10
All other things remaining the same, the higher the price level, the __________ the quantity of real GDP supplied.
smaller
greater
more constant
less constant
Question 11
What are the two main influences that the world economy has on aggregate demand?
foreign exchange rate and foreign income
foreign investments and foreign profit
revenues from overseas and foreign exchange rate
foreign expenditures and international trade
Question 12
Which of the following would cause an increase in aggregate demand in the short run?
an increase in the supply of money
a decrease in the price level
an increase in taxes
a crop failure
Question 13
The marginal __________ is the fraction of a change in real GDP that is paid in income tax.
tax rate
income
GDP
tax revenue
Question 14
__________ occurs when aggregate planned expenditure equals real GDP.
Price-fixing
Stable economic leveling
Unplanned inventory change
Equilibrium expenditure
Question 15
Which of the following does NOT decrease aggregate demand in the United States?
a decrease in the price of oil
a decrease in GDP in Germany
a decrease in government spending
a decrease in the supply of money
Question 16
How does an increase in potential GDP affect aggregate supply?
It decreases aggregate supply.
It increases aggregate supply.
It barely has any effect.
Since it applies to an “imaginary” market, it does not affect aggregate supply.
Question 17
To determine the equilibrium price level and equilibrium level of real GDP, the aggregate demand and aggregate supply must __________.
be considered separately
intersect
be disregarded
be considered as a multiplier
Question 18
The __________ curve summarizes the relationship between aggregate planned expenditure and the real GDP.
AES
AE
AD
APE
Question 19
A rise in the price level __________ the buying power of money.
does not affect
increases
decreases
inverts
Question 20
What is the total amount of final goods and service produced in a country that people, businesses, governments, and foreigners plan to buy?
the supply-demand model
the quantity of real GDP supplied
the quantity of potential GDP
the quantity of real GDP demanded
Lesson 7
Question 21 0 / 2.5 points
Since the long-run Phillips curve is vertical at the natural unemployment rate, what type of trade-off is there between employment and inflation?
There is no trade-off between employment and inflation.
There is a constant trade-off between employment and inflation.
There is a linear trade-off between employment and inflation.
Employment and inflation are indirectly proportional (the one goes up, the other goes down..
Question 22
In the short run, increases in the money supply increase the level of output because __________.
prices and wages are sticky
prices and wages are flexible
interest rates are sticky
demand is fixed
Question 23
Say’s law from a classical economic perspective __________.
states that supply creates its own demand
explains the classical idea that the value of GDP will equal the demand for goods and services
supports economists belief that neither surplus nor shortage would ever exist when production and demand are equal for goods and services
all of the above
Question 24
What policy action by the Fed describes an unexpected rise in interest rates and deceleration in money growth in order to slow inflation at the cost of recession?
rational reduction
surprise inflation reduction
credible announced inflation reduction
statistical model of reduction
Question 25
Classical economics refers to a body of work initially developed by __________.
Keynes
Malthus
Say
Smith
Question 26
To lower the expected inflation rate, the Fed must take actions that will __________ the actual inflation rate.
decelerate
accelerate
increase
decrease
Question 27
In __________, monetary policy can change the level of output.
the long run only
both the short run and the long run
neither the short run nor the long run
the short run only
Question 28
What is the difference between how GDP is determined in the short run and how it is determined in the long run?
In the short run, GDP is determined by current demand for goods and services in the economy. In the long run, GDP is determined by supply of labor, the stock of capital and technological progress.
In the short run, GDP is determined by future demand for goods and services in the economy. In the long run, GDP is determined by supply of labor, the stock of capital and technological progress.
In the long run, GDP is determined by current demand for goods and services in the economy. In the short run, GDP is determined by supply of labor, the stock of capital and technological progress.
In the long run, GDP is determined by future demand for goods and services in the economy. In the short run, GDP is determined by supply of labor, the stock of capital and technological progress.
Question 29
If the natural unemployment rate increases, the short-term Phillips curve __________ and the long-run Phillips curve __________.
shifts rightward; shifts rightward
shifts leftward; shifts leftward
shifts rightward; remains the same
shifts leftward; remains the same
Question 30
A decrease in aggregate demand that brings a movement down along the aggregate supply curve lowers the price level and __________ real GDP.
does not affect
decreases
increases
varies with
Question 31
What policy action by the Fed describes when people believe that the Fed will lower the inflation rate, and the expected inflation rate falls in order to slow the inflation rate without any accompanying loss of output or increase in unemployment?
rational reduction
surprise inflation reduction
credible announced inflation reduction
statistical model of reduction
Question 32
What is the proposition that when the inflation rate changes, the unemployment rate changes temporarily and then turns to the natural unemployment rate?
the trade-off theory
the natural rate hypothesis
Okun’s law
Phillip’s monetary policy
Question 33
The doctrine that states that "supply creates its own demand" is called __________ law.
Keynes's
Smith's
Say's
Malthus's
Question 34 0 / 2.5 points
How does change in the expected inflation rate affect the short-run tradeoff between inflation and unemployment?
Immediately, because the money wage rate is sensitive to change in the expected inflation rate.
Immediately, because unemployment and job production respond quickly to change in the expected inflation rate.
Gradually, because the money wage rate responds only gradually to change in the expected inflation rate.
Gradually, because the natural unemployment rate rarely changes.
Question 35
Suppose that the unemployment rate is __________ the natural rate. We would expect prices to fall, money demand to fall, interest rates to fall, and total demand to __________.
above; rise
above; fall
below; rise
below; fall
Question 36
In the long run, a decrease in the money supply __________.
Question 37
The Keynesian view that demand could fall short of production is more likely to hold true if __________.
Question 38
The trade-off between inflation and unemployment occurs when a lower unemployment rate brings a __________.
Question 39
The short-run Phillips curve is another way at looking at the __________.
Question 40
Keynes expressed doubts that that the economy would __________.
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