C11 Lesson 6 & 7 Exam SCORE 92.5 PERCENT

      

Question 1

2.5 / 2.5 points

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.

Question options:

  

marginal tax rate

 

marginal multiplier

 

expenditure reducer

 

expenditure   multiplier

 

Question 2

2.5 / 2.5 points

       

When the Federal Reserve changes the quantity of money and the interest rate, it influences aggregate demand by using __________.

Question options:

  

the world economy

 

consumer expectations

 

monetary policy

 

fiscal policy

 

Question 3

2.5 / 2.5 points

       

The change in equilibrium expenditure also equals the change in __________.

Question options:

  

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?

Question options:

  

aggregate demand

 

aggregate supply

 

the money wage rate

 

the money price index

 

Question 5

2.5 / 2.5 points

       

When the real GDP increases, disposable income and consumption expenditure __________.

Question options:

  

do not change

 

become inverted

 

decrease

 

increase

 

Question 6

2.5 / 2.5 points

       

All other things remaining the same, the lower the price level, the __________ the quantity of real GDP demanded.

Question options:

  

smaller

 

greater

 

more constant

 

less constant

 

Question 7

2.5 / 2.5 points

       

When the price level increases, the real interest rate __________.

Question options:

  

is not affected

 

falls

 

rises

 

will rise or fall depending on   demand

 

Question 8

2.5 / 2.5 points

       

If the price level from the GDP price index falls, what happens to the quantity of real GDP supplied?

Question options:

  

it remains constant

 

it increases

 

it decreases

 

it barely changes

 

Question 9

2.5 / 2.5 points

       

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?

Question options:

  

aggregate demand

 

aggregate supply

 

the money wage rate

 

the money price index

 

Question 10

2.5 / 2.5 points

       

All other things remaining the same, the higher the price level, the __________ the quantity of real GDP supplied.

Question options:

  

smaller

 

greater

 

more constant

 

less constant

 

Question 11

2.5 / 2.5 points

       

What are the two main influences that the world economy has on aggregate demand?

Question options:

  

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

2.5 / 2.5 points

       

Which of the following would cause an increase in aggregate demand in the short run?

Question options:

  

an increase in the   supply of money

 

a decrease in the price level

 

an increase in taxes

 

a crop failure

 

Question 13

2.5 / 2.5 points

       

The marginal __________ is the fraction of a change in real GDP that is paid in income tax.

Question options:

  

tax rate

 

income

 

GDP

 

tax revenue

 

Question 14

2.5 / 2.5 points

       

__________ occurs when aggregate planned expenditure equals real GDP.

Question options:

  

Price-fixing

 

Stable economic leveling

 

Unplanned inventory change

 

Equilibrium   expenditure

 

Question 15

2.5 / 2.5 points

       

Which of the following does NOT decrease aggregate demand in the United States?

Question options:

  

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

2.5 / 2.5 points

       

How does an increase in potential GDP affect aggregate supply?

Question options:

  

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

2.5 / 2.5 points

       

To determine the equilibrium price level and equilibrium level of real GDP, the aggregate demand and aggregate supply must __________.

Question options:

  

be considered separately

 

intersect

 

be disregarded

 

be considered as a multiplier

 

Question 18

2.5 / 2.5 points

       

The __________ curve summarizes the relationship between aggregate planned expenditure and the real GDP.

Question options:

  

AES

 

AE

 

AD

 

APE

 

Question 19

2.5 / 2.5 points

       

A rise in the price level __________ the buying power of money.

Question options:

  

does not affect

 

increases

 

decreases

 

inverts

 

Question 20

2.5 / 2.5 points

       

What is the total amount of final goods and service produced in a country that people, businesses, governments, and foreigners plan to buy?

Question options:

  

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?

Question options:

  

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

2.5 / 2.5 points

       

In the short run, increases in the money supply increase the level of output because __________.

Question options:

  

prices and wages are   sticky

 

prices and wages are flexible

 

interest rates are sticky

 

demand is fixed

 

Question 23

2.5 / 2.5 points

       

Say’s law from a classical economic perspective __________.

Question options:

  

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

2.5 / 2.5 points

       

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?

Question options:

  

rational reduction

 

surprise inflation   reduction

 

credible announced inflation   reduction

 

statistical model of reduction

 

Question 25

2.5 / 2.5 points

       

Classical economics refers to a body of work initially developed by __________.

Question options:

  

Keynes

 

Malthus

 

Say

 

Smith

 

Question 26

2.5 / 2.5 points

       

To lower the expected inflation rate, the Fed must take actions that will __________ the actual inflation rate.

Question options:

  

decelerate

 

accelerate

 

increase

 

decrease

 

Question 27

2.5 / 2.5 points

       

In __________, monetary policy can change the level of output.

Question options:

  

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

2.5 / 2.5 points

  

What is the difference between how GDP is determined in the short run and how it is determined in the long run?

Question options:

  

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

2.5 / 2.5 points

       

If the natural unemployment rate increases, the short-term Phillips curve __________ and the long-run Phillips curve __________.

Question options:

  

shifts rightward;   shifts rightward

 

shifts leftward; shifts leftward

 

shifts rightward; remains the same

 

shifts leftward; remains the same

 

Question 30

2.5 / 2.5 points

       

A decrease in aggregate demand that brings a movement down along the aggregate supply curve lowers the price level and __________ real GDP.

Question options:

  

does not affect

 

decreases

 

increases

 

varies with

 

Question 31

2.5 / 2.5 points

       

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?

Question options:

  

rational reduction

 

surprise inflation reduction

 

credible announced   inflation reduction

 

statistical model of reduction

 

Question 32

2.5 / 2.5 points

       

What is the proposition that when the inflation rate changes, the unemployment rate changes temporarily and then turns to the natural unemployment rate?

Question options:

  

the trade-off theory

 

the natural rate   hypothesis

 

Okun’s law

 

Phillip’s monetary policy

 

Question 33

2.5 / 2.5 points

       

The doctrine that states that "supply creates its own demand" is called __________ law.

Question options:

  

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?

Question options:

  

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

2.5 / 2.5 points

       

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 __________.

Question options:

  

above; rise

 

above; fall

 

below; rise

 

below; fall

 

Question 36

2.5 / 2.5 points

       

In the long run, a decrease in the money supply __________.

Question options:

  

has no effect on   real interest rates, investment, or output

 

increases real interest rates,   decreases investment, and decreases output

 

increases real interest rates,   increases investment, and decreases output

 

decreases real interest rates,   decreases investment, and decreases output

 

Question 37

2.5 / 2.5 points

       

The Keynesian view that demand could fall short of production is more likely to hold true if __________.

Question options:

  

wages and prices are fully   flexible

 

prices, but not wages, are fully   flexible

 

wages and prices are   not fully flexible

 

wages, but not prices, are fully   flexible

 

Question 38

2.5 / 2.5 points

       

The trade-off between inflation and unemployment occurs when a lower unemployment rate brings a __________.

Question options:

  

lower inflation rate

 

higher inflation   rate

 

lower aggregate supply

 

higher aggregate supply

 

Question 39

2.5 / 2.5 points

       

The short-run Phillips curve is another way at looking at the __________.

Question options:

  

equilibrium expenditure

 

AD curve

 

aggregate supply   (AS. curve

 

potential GDP

 

Question 40

2.5 / 2.5 points

       

Keynes expressed doubts that that the economy would __________.

Question options:

  

ever return to full-employment

 

ever move away from   full-employment

 

recover from a major   recession without active policy

 

recover from the effects of higher   prices