Macro Final

An adverse supply shock will cause output a. And price to rise b. And price to fall c. To rise and price to fall d. To fall and price to rise

WRONG

Suppose the economy is currently experiencing 6% inflation per year. If the Fed wants to reduce inflation 2% and the sacrifice ratio is 5, then how much annual output must be sacrificed in the transition? a. 5% b. 10% c. 15% d. 20%

WRONG

which of the following shifts short-run aggregate supply right? a. an increase in the minimum wage b. an increase in immigration from abroad c. an increase in the price of oil d. an increase in the actual price level

IDK

Suppose that foreign citizens decide to purchase more U.S. pharmaceuticals and U.S. citizens decide to buy more stock in foreign corporations. Other things the same, these actions. a. raise both U.S. net exports and U.S. net capital outflows. b. raise U.S. net exports and lower U.S. net capital outflows. c. lower both U.S. net exports and U.S. net capital outflows. d. lower U.S. net exports and raise U.S. net capital outflows.

a

The economy will move to a point on the short-run Phillips curve where unemployment is higher if a. The inflation rate decreases b. The government increases its expenditures c. The Fed increases the money supply d. None of the above is correct

a

Unemployment would decrease and prices would increase if a. Aggregate demand shift right b. Aggregate demand shift left c. Aggregate supply shifted right d. Aggregate supply shifted left

a

Which of the following does purchasing-power parity imply? a. The purchasing power of the dollar is the same in the U.S. as in foreign countries b. The price of domestic goods relative to foreign goods cannot change c. The nominal exchange rate is the ratio of U.S. prices to foreign prices d. All the above are correct

a

aggregate demand includes a. the quantity of goods and services the government, households, firms, and customers aboard want to buy b. neither the quantity of goods and services the government, households, nor firms want to buy not the quantity of goods and services customers aboard want to buy. c. the quantity of goods and service the government wants to buy, but not the quantity of goods and services households, firms, or customers aboard want to buy d. the quantity of goods and services households and firms want to buy, but not the quantity of goods and services the government wants to buy

a

during recessions investment a. falls by a larger percentage than GDP b. falls by about the same percentage as GDP c. falls by a smaller percentage than GDP d. falls but the percentage change is sometimes much larger and sometimes much smaller

a

the aggregate demand and aggregate supply graph has the a. quantity of output on the horizontal axis. output is best measured by real GDP b. quantity of output on the horizontal axis. output is best measured by nominal GDP c. quantity of output on the vertical axis. output is best measured by real GDP d. quantity of output on the vertical axis. output is best measured by nominal GDP

a

the economy will move to a point on the short-run Phillips curve where unemployment is higher if

a

unemployment would decrease and prices would increase if a. aggregate demand shifted right b. aggregate demand shifted left c. aggregate supply shifted right d. aggregate supply shifted left

a

which of the following is a lesson concerning shifts in aggregate demand? a. they contribute to fluctuations in output b. in the long-run they change real output, but opt the price level c. policymakers are unable to mitigate the severity of economic fluctuations d. all of the above are correct

a

which of the following is an example of crowding out? a. an increase in government spending increases interest rates, causing investment to fall b. a decrease in private savings increases interest rates, causing investment to fall c. a decrease in money supply increases interest rates, causing investment to fall d. an increase in taxes increases interest rates, causing investment to fall

a

According to purchasing-power parity, if over the course of a year the price level in the U.S. rises more than in Japan, then which of the following falls? a. the U.S. real exchange rate, but not the US nominal exchange rate b. the US nominal rate, but not the US nominal exchange rate c. the US nominal rate and the US real exchange rate d. neither the real exchange rate nor the nominal exchange rate

b

Any policy change that reduced the natural rate of unemployment a. Would shift the long-run Phillips curve to the right b. Would shift the long-run aggregate-supply curve to the right c. Would be a policy change that impeded the functioning of the labor market d. All of the above is correct

b

Contractionary monetary policy a. Leads to disinflation and makes the short-run Philips curve shift right b. Leads to disinflation and makes the short-run Phillips curve shift left c. Does not lead to disinflation but makes the short-run Phillips curve shift right d. Does not lead to disinflation but makes the short-run Phillips curve shift left

b

Goods that cost 1/5 of one dollar in the U.S. cost one kroner in Denmark, the real exchange rate would be computed as how many Danish goods per U.S. goods? a. Five b. The amount of kroner that can be brought with twenty U.S. cents c. The amount of kroner that can be bought with 5 dollars d. None of the above correct

b

If Canada's national saving exceeds is domestic investment, then Canada has a. Positive net capital outflows and negative net exports b. Positive net capital outflows and positive net exports c. Negative net capital outflows and negative net exports d. Negative net capital outflows and positive net exports

b

If the price of a sofa is $800 in the U.S. and 2400 pesos in Argentina, and the exchange rate is 4 pesos per dollar, what is the real exchange rate? a. 3 b. 4/3 c. ¾ d. None of the above is correct

b

If the real exchange rate between the U.S. and Japan is 1, the nominal exchange rate is 100 yen per U.S. dollar and the price of chicken is the U.S. is $2.50 per pound, what is the price of chicken in Japan? a. 400 yen per pound b. 250 yen per pound c. 100 yen per pound d. 40 yen per pound

b

In the long run, a. The natural rate of unemployment depends primarily on the level of aggregate demand b. Inflation depends primarily upon the money supply growth rate c. There is a tradeoff between the inflation rate and the natural rate of unemployment d. All f the above is correct

b

in order to understand how the economy works in the short run, we need to a. study the classical model b. study a model in which real and nominal variables interact c. understand that "money is a veil" d. understand that money is neutral in the short run

b

in the long run, a. the nature rate of unemployment depends primarily on the level of aggregate demand b. inflation depends primarily upon the money supply growth rate c. there is a tradeoff between the inflation rate and the natural rate of unemployment d. all of the above are correct

b

the initial impact of an increase in an investment tax credit is to shift a. aggregate demand right b. aggregate demand left c. aggregate supply right d. aggregate supply left

b

which of the following shifts short-run aggregate supply right? a. an increase in the minimum wage b. an increase in immigration from aboard c. an increase in the price of oil d. an increase in the actual price level

b

If the U.S. price level is increasing by 3 percent annually and the Japanese price level is increasing by 1 percent annually, then according to purchasing-power parity, by about what percent would the nominal exchange rate be changing? (Figure out CORRECT answer) a. Decreasing by 4 percent b. Decreasing by 2 percent c. Increasing by 4 percent d. Increasing by 2 percent

c

people will want to hold more money if the price level a. or if the interest rate increases b. or if the interest rate decreases c. increases if the interest rate decreases d. decreases of if the interest rate increases

c

the term crowding-out effect refers to a. the reduction in aggregate supply that results when a monetary expansion causes the interest rate to decrease b. the reduction in aggregate demand that results when a monetary expansion causes the interest rate to decrease c. the reduction in aggregate demand that results when a fiscal expansion causes the interest rate to increase d. the reduction in aggregate demand that results when a decrease in government spending or an increase in taxes causes the interest rate to increase

c

If a country has net exports of $8 billion and sold $40 billion of goods and services aboard, then it has a. $48 billion of imports and $40 billion of exports b. $48 billion of exports and $40 billion of imports c. $40 billion of imports and $32 billion of exports d. $40 billion of exports and $32 billion of imports

d

In the long run, policy that changes aggregate demand changes a. Both unemployment and the price level b. Neither unemployment nor the price level c. Only unemployment d. Only the price level

d

Paul Samuelson, a famous economist, said that a. "the bond market has predicted zero out of the past nine recessions" b. "the stock market has predicted zero out of the past nine recessions" c. "the bond market has predicted five out of the past nine recessions" d. "the stock market has predicted five out of the past nine recessions"

d

Prices in both the U.S. and India rise, but prices in India increase by a smaller percentage. According to purchasing-power parity the U.S. dollar a. gains value both in terms of the domestic good and services it can buy and in terms of Indian currency it can buy. b. gains value in terms of the domestic goods and services it can buy, but loses value in terms of the Indian currency it can buy c. loses value in terms of the domestic goods and services it can buy, but gains value in terms of the Indians currency it can buy. d. loses value both in terms of the domestic goods and services it can buy and in terms of the Indians currency it can buy

d

Samuelson and Solow argued that when unemployment is high, there is a. Upward pressure on wages and prices b. Upward pressure on wages and downward pressure on prices c. Upward pressure on prices and downward pressure on wages d. Downward pressure on wages and prices

d

Which of the following would cause the price level to fall and output to rise in the short run? a. An increase in the money supply b. A decrease in the money supply c. An adverse supply shock d. A favorable supply shock

d

critics of stabilization policy argue that a. there is a lag between the time policy is passed and the time policy has an impact on the economy b. the impact of policy may last longer than the problem it was designed to offset c. policy can be a source of, instead of a cure for, economic fluctuations d. all of the above are correct

d

if the inflation rate is zero, then a. both the nominal interest rate and the real interest rate can fall below zero b. the nominal interest rate can fall below zero, but the real interest rate cannot fall below zero c. the real interest rate can fall below zero, but the nominal interest rate cannot fall below zero d. neither the nominal interest rate nor the real interest rate can fall below zero

d

which of the following would increase output in the short run? a. an increase in stock prices makes people feel wealthier b. government spending increases c. firms chose to purchase more investment goods d. all of the above are correct

d

as the price level falls a. people will want to hold more money, so the interest rate rises b. people will want to hold more money, so the interest rate falls c. people will want to hold less money, so the interest rate falls d. people will want to hold less money, so the interest rate rises

wrong