Macro Final

(a). increases the equilibrium

. According to the liquidity preference theory, an increase in the overall price level of 10 percent

(b.) 4%

. During the 2008-2009 recession real GDP fell by about

(a) raise both

. During the financial crisis it was proposed that firms be provided with a tax credit for investment projects. Such a tax credit would

(b) aggregate supply

. In 1986, OPEC countries increased their production of oil. This caused

True

. In the long-run, an increase in aggregate demand increases the price level, but not real GDP.

(a). 2 percent.

. Refer to Figure 34-1. There is an excess demand for money at an interest rate of

all

. Refer to Figure 34-6. Suppose the graphs are drawn to show the effects of an increase in government purchases. If it were not for the increase in r from r1 to r2, then

(d). sell government bonds, which will reduce the money supply

. Refer to Figure 34-9. Suppose the economy is currently at point A. To restore full employment, the Federal Reserve should

(c). rises. higher wages

. Refer to Stock Market Boom 2015. What happens to the expected price level and what impact does this have on wage bargaining?

(b). A, D

. Refer to figure 35-5. In this order, which curve is a long-run Phillips curve and which is a short-run Phillips curve?

(a) $160 billion

A country has output of $600 billion, consumption of $350 billion, government expenditures of $90 billion and investment of $60 billion. What is its supply of loanable funds?

(d) right, depreciate.

If China experienced capital flight, the supply of Chinese yuan in the market for foreign-currency exchange would shift

(a) 10%

In October 2009, the official unemployment rate rose to

(d). the Federal Reserve, money supply

Monetary policy is determined by

(d). in the long run, but not in the short run.

Most economists believe that classical macroeconomic theory is a good description of the economy

(b). net exports would rise, but what would happen to the exchange rate is uncertain.

Other things the same, if foreign companies desired to buy more U.S. medical equipment and U.S. residents desired to buy more foreign bonds

(b). measures economic activity and income.

Real GDP

(b) 4 percent, $40 billion

Refer to Figure 32-1. The loanable funds market is in equilibrium at

(b) .8, 400

Refer to Figure 32-2. What are the equilibrium values of the real exchange rate and net exports?

(c). supply curve in panel a.

Refer to Figure 32-3. National saving is represented by the

(b) shift demand to right and supply to left

Refer to Figure 32-4. Suppose that U.S. firms desire to purchase more equipment and build more factories and stores in the U.S. The effects of this are illustrated by

d. None of the above is correct.

Refer to Figure 32-6. If the economy were originally in equilibrium at a and g and the government removed import quotas on autos the economy would move to

(b) real GDP.

Refer to Figure 33-1. Line A is

D

Refer to Figure 33-10. If the economy starts at point C, stagflation would be consistent with point

(b) Y2

Refer to Figure 33-3. The natural rate of output occurs at

(d). moves to D.

Refer to Figure 33-4. If the economy is at A and there is a fall in aggregate demand, in the short run the economy

(d). 3, 2, 1, 4

Refer to Figure 34-3. Which of the following sequences (numbered arrows) shows the logic of the interest-rate effect?

(c) bond issuers and banks

Refer to Figure 34-4. Suppose the money-demand curve is currently MD2. If the current interest rate is r2, then

(a). shift aggregate demand from AD1 to AD2

Refer to Figure 34-8. An increase in government purchases will

(c) point C on the left-hand graph

Refer to Figure 35-1. Assuming the price level in the previous year was 100, point G on the right-hand graph corresponds to

0.64

Refer to Scenario 34-2. The marginal propensity to consume for this economy is

(a). rise, increase .

Refer to U.S. Financial Crisis. U.S. net exports would

(b). high, downward pressure

Samuelson and Solow reasoned that when aggregate demand was low, unemployment was

(a). production is more profitable and employment rises

The sticky-wage theory of the short-run aggregate supply curve says that when the price level rises more than expected,

(b). inflation but not the natural rate of unemployment

Which of the following depends primarily on the growth rate of the money supply?

(d). When real GDP falls,

Which of the following is correct?

(b) The price level

Which of the following statements concerning the aggregate demand and aggregate supply model is correct?

(B) shifts supply, exchange left

a rise in the budget deficit

(d). it operations are not controlled by the political process.

If a central bank is independent,

(c) decrease, so its exchange rate will rise.

If the Canadian government raises it budget deficit, then Canada's net capital outflows will

(c). 4.

If the MPC = 0.75, then the government purchases multiplier is abou

(d) the demand for dollars in the market for foreign-currency exchange would increase, but the demand for loanable funds would not.

If the U.S. were to impose import quotas

(c). short-run economic fluctuations.

In 1936, John Maynard Keynes published a book, The General Theory, which attempted to explain

(c) the Phillips curve did not apply in the long run

In 1968, economist Milton Friedman published a paper criticizing the Phillips curve on the grounds that

(c). Both a and b are consistent

In 1995 House Speaker Newt Gingrich threatened to send the United States into default on its debt. During the day of this announcement, U.S. interest rates rose and the real exchange rate of the U.S. dollar depreciated. Which of these changes is consistent with the results of the open-economy macroeconomic model?

(c) reduced unemployment and raised inflation.

In 2009 Congress and President Obama approved tax cuts and increased government spending. According to the shortrun Phillips curve these policies should have`

(c) both

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?

(d) the interest rate rises and aggregate supply is relatively steep

In 2009 President Obama and Congress increased government spending. Some economists thought this increase would have little effect on output. Which of the following would make the effect of an increase in government expenditures on aggregate demand smaller?

c. $812. $250

In a certain economy, when income is $1000, consumer spending is $800. The value of the multiplier for this economy is 2.5. It follows that, when income is $1020, consumer spending is

(b) the recession that followed SMALLER, but in doing so produced a LESS favorable tradeoff between inflation and unemployment.

In the 1970's the Federal Reserve responded to an adverse supply shock. Its policy made

(c). net exports fall and the real exchange rate rises.

In the open-economy macroeconomic model, if investment demand increases, then

(d) S = I + NCO

In the open-economy macroeconomic model, the market for loanable funds identity can be written as

a. 1/6

Investment averages about ____ of GDP

(c). increase aggregate demand

Keynes believed that economies experiencing high unemployment should adopt policies to

(a) short-run fluctuations in the economy.

Most economists use the aggregate demand and aggregate supply model primarily to analyze

(c) persistently had a trade deficit.

Over the past three decades, the United States has

(b). a shift in the short run aggregate supply curve

A change in the expected price level is likely to cause which of the following?

(c) $400 billion

A country has I = $200 billion, S = $400 billion, and purchased $600 billion of foreign assets, how many of its assets did foreigners purchase?

(b) liquidity trap

A situation in which the Fed's target interest rate has fallen as far as it can fall is sometimes described as a

False

According to classical macroeconomic theory, changes in the money supply change real GDP but not the price level

(d.) decrease and the quantity of money demanded will increase

According to liquidity preference theory, if the quantity of money supplied is greater than the quantity demanded, then the interest rate will

(b). -$100 billion

An open economy has GDP of $1,200 billion, consumption expenditures of $900 billion government expenditures of $400 billion, domestic investment of $100 billion, and net exports of -$200 billion. What is its demand for loanable funds?

(d). wage inflation and unemployment

Economist A.W. Phillips found a negative correlation between

(b) False

If C+I+G>Y, then net exports and net capital outflow are both greater than zero.

(b). shifted left by more than

Suppose that during the Great Depression long-run aggregate supply shifted left. To be consistent with what happened to the price level and output, what would have had to happen to aggregate demand?

(b) the government should promote full employment and production

The Employment Act of 1946 states that

True

The Fed can influence the money supply by changing the interest rate it pays banks on the reserves they are holding

(c) caused output to fall,

The Volcker disinflation

(a). sloping downward.

The aggregate demand is described graphically as

(d). increases the real value

The aggregate-demand curve shows that a decrease in the price level

(b) a vertical long-run

The classical dichotomy and monetary neutrality are represented graphically by

(c) the investment accelerator

The idea that expansionary fiscal policy has a positive affect on investment is known as

(c) is the unemployment rate that the economy tends to move to in the long run.

The natural rate of unemploymen

(a) nominal variables

The saying "Money is a veil." means that

(A) only national saving when the interest rate rises.

The slope of the supply of loanable funds is based on an increase in