If the price of computers falls during a period when the average price level remains constant, which of the following has occurred?Deflation Inflation A recession A change in relative prices Price stability refers to:A constant average pr
If the price of computers falls during a period when the average price level remains constant, which of the following has occurred?
Deflation | ||
Inflation | ||
A recession | ||
A change in relative prices | ||
Price stability refers to:
A constant average price level. | ||
An inflation rate of zero. | ||
Increases in prices equal to or less than the growth rate of the economy. | ||
The absence of significant changes in the average price level. | ||
If the CPI is 119 in Year X, then it costs _______ in Year X to buy the same market basket that cost _______ in the base period.
$100; $119 | ||
$19; $100 | ||
$100; $19 | ||
$119; $100 | ||
People who are not working for pay but are actively looking for work are not included in the labor force.
FALSE | ||
TRUE | ||
During a period of inflation:
Relative prices are rising, but it is not certain what is happening to average prices. | ||
Both relative prices and average prices are rising. | ||
Specific prices are rising, and relative prices are falling. | ||
Average prices are rising, but it is not certain what is happening to relative prices. | ||
The labor force is smaller than the total population because the labor force does not include:
People looking for a job. | ||
People who have jobs. | ||
Teachers. | ||
The very young and old. | ||
Nominal GDP is defined as the:
Dollar value of services but not goods. | ||
Value of output in current dollars. | ||
Value of output in constant prices. | ||
Output produced by domestically owned factors of production regardless of where the factors are located. | ||
Keynes believed that small disturbances in the economy would be made even greater by the market mechanism and thus government intervention was required.
FALSE | ||
TRUE | ||
The total amount of output producers are willing and able to produce at alternative price levels in a given time period is known as:
Aggregate supply. | ||
Real GDP. | ||
Aggregate demand. | ||
Macro equilibrium. | ||
At macro equilibrium:
Exports equal imports. | ||
Aggregate demand equals aggregate supply. | ||
Population growth is stable. | ||
Money supply equals money demand. | ||
According to the real balances effect, if the price level rises then the real value of savings increases and individuals will buy more output.
FALSE | ||
TRUE | ||
According to supply-side theories, an increase in supply incentives shifts the aggregate:
Supply curve to the right. | ||
Supply curve to the left. | ||
Demand curve to the left. | ||
Demand curve to the right. | ||
Which of the following is an example of the real balances effect, assuming the U.S. price level decreases?
U.S. production costs stay constant and profits for businesses decrease. | ||
The demand for loans decreases so interest rates decline and loan-financed purchases increase. | ||
U.S. goods are less expensive for foreigners to buy and exports increase. | ||
The purchasing power of money increases and people buy more goods. | ||
Which of the following suggests that lower average prices stimulate more borrowing?
The real balances effect | ||
The cost effect | ||
The profit effect | ||
The interest rate effect | ||
Monetary policy emphasizes the role of money and interest rates in shifting the aggregate supply curve.
TRUE | ||
FALSE | ||
At the intersection of the aggregate supply and aggregate demand curves, the economy is experiencing:
Macro equilibrium. | ||
Full employment. | ||
Low levels of inflation. | ||
Population growth. | ||
The Classical view of the economy is characterized by:
Overt fiscal policy. | ||
A laissez-faire approach. | ||
The inherent instability of the economy. | ||
The belief that demand creates its own supply. | ||
Fiscal policy is the use of the government's tax and spending powers to shift the aggregate demand curve.
TRUE | ||||||||||||||||||||||||||||||||||||||||||||||||
FALSE | ||||||||||||||||||||||||||||||||||||||||||||||||
Figure 11.2—Aggregate supply and demand
Individual employment and training programs are levers most likely to be advocated by:
Ceteris paribus, based on the real balances effect, if the price level falls:
Unlike the Classical economists, Keynes asserted that:
Macro equilibrium always occurs at an optimal level of output.
A tax hike will increase the level of aggregate demand since the government will have more money to spend.
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12 years ago
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