macro exam 3

unemployment

According to the principle of monetary neutrality, a decrease in the money supply will not change

rises, shifting short-run aggregate supply left

An economic expansion caused by a shift in aggregate demand correct itself over time as the expected price level

move toward deficit

During recessions, automatic stabilizers tend to make the government's budget

the US price level and real GDP to rise

Economic expansions in Europe and China would cause

fall, making aggregate demand decrease

If countries that imported goods and services from the US went into recession, we would expect that US net exports would

mostly relevant to the long run

Most economics believe in the principle of monetary neutrality is

decrease aggregate demand

The impact of the repeal of an investment tax credit

in the price level, but not output

The long run aggregate supply curve shows that a permanent change in aggregate demand would lead to a long-run change

The price level is 4 and velocity is 8

The money supply in Muckland is $100 billion. Nominal GDP is $800 billion and real GDP is $200 billion. What are the price level and velocity in Muckland?

the nominal interest rate falls, but the real interest rate does not

Under the assumptions of the Fisher effect and monetary neutrality, if the money supply growth rate falls, then

an open-market purchase of bonds by the Federal Reserve

Which of the following events cold explain a right shift of the money-supply curve?

With constant money supply and velocity, an increase in output creates a proportional increase in the price level

Which of the following is NOT implied by the quantity equation?

only the short-run aggregate supply curve right

a decrease in the expected price level shifts

right, and an increase in the actual price level does not shift short-run aggregate supply

a decrease in the expected price levels shifts short-run aggregate supply to the

recession

a relatively mild period of falling incomes and rising unemployment is called a

if the federal reserve chose to increase the money supply

according to liquidity preference theory, the money-supply curve would shift rightward

price level would rise by 5 %; real GDP would be unchanged

according to the quantity theory of money, if the money supply increases by 5%, then

3.57

assume the MPC is .72. the multiplier is

right by $68 billion

assume the mpc is .625. assume there is multiplier effect and that the total crowding-out effect is 12 billion. an increase in government purchases of $30 billion will shift aggregate demand to the

to fall and taxes to rise

during periods of expansion, automatic, stabilizers cause government expenditures

reduce interest rates by increasing the money supply

if congress increases taxes to balance the federal budget, then to prevent unemployment and a recession the fed will

prices will be lower and unemployment will be unchanged

if policy makers decrease aggregate demand, then in the long run

falls and unemployment rises.

if policymakers decrease aggregate demand, then in the short run the price level

the money supply increases, causing the interest rate to fall

in which of the following cases does the aggregate-demand curve shift to the right

increase in output and increase in price in the short run

increased government spending on national defense would result in

increases in output and increase in price in the short run

lowering the corporate income taxes results in

aggregate demand curve shifts to the right

other thing the same, when the government spends more,

decrease consumption, shown by shifting the aggregate-demand curve to the left

suppose a fall in stock prices makes people feel poorer. the decrease in wealth would induce people to

shift aggregate demand curve to the left

suppose businesses in general believe that the economy is likely to head into recession and so they reduce capital purchases. Their reactions would

the federal reserve increases the money supply money demand decreases the price level decreases

suppose the current equilibrium interest rate is r3. which of the following events would cause the equilibrium interest rate to decrease

increase in output and decrease in the price in the short run

technology advancement causes

quantity of output on the horizontal axis. output is best measured by real GDP

the aggregate demand and aggregate supply graph has the

only in the long run

the aggregate demand and aggregate supply model implies monetary neutrality

is vertical is a graphical representation of the classical dichotomy indicates monetary neutrality in the long run

the long run aggregate supply curve

either immigration from abroad increases or technology improves

the long run aggregate supply curve shifts right if

reduce the minimum-wage

the long run aggregate supply curve would shift right if the government were to

immigration from abroad increases the capital stock increases technology advances

the long-run aggregate supply curve shifts right if

production is less profitable and employment falls

the sticky-wage theory of the short-run aggregate supply curve says that when the price level is lower than expected

the equilibrium interest rate increases

using the liquidity-preference model, when the federal reserve decreases the money supply

nominal interest rates

when money is neutral, which of the following increases when the money supply growth rate increases?

decreases as shown by a shift of the aggregate demand curve to the left

when taxes increase, consumption

output rises and price rises

when the Fed announces a lower targeted federal funds rate and use open market operations to achieve it, which of the following is most likely to happen for the economy in the short run

real gdp falls and price level falls

when the governments implement contractionary fiscal policy to increase taxes, which of the following is most likely to happen for the economy in the short run?

interest rates fall and so aggregate demand increases

when the money supply increases

the equilibrium value of money decreases

when the money supply increases

increases, and so the value of money falls

when the price level rises, the number of dollars needed to buy a representative basket of goods...

the long run, but not the short, aggregate supply curve is consistent with the idea that nominal variables do not affect real variables

which is correct

a decrease in the price level

which of the following events could explain the leftward shift of the money-demand curve from MD1 to MD2

an increase in government expenditures or a decrease in taxes

which of the following events shifts aggregate demand rightward

an increase in the capital stock

which of the following shifts both the short-run and long-run aggregate supply right?

an increase in immigration from abroad

which of the following shifts short-run aggregate supply right

the multiplier effect

which of the following tends to make aggregate demand shift further to right than the amount by which government expenditures increase?

the crowding-out effect

which of the following tends to make the size of a shift in aggregate demand resulting from an increase in government purchases smaller than it otherwise would be

short-run aggregate supply shifts right

which of the following would cause prices to fall and output to rise in the short run

an increase in stock prices make people feel wealthier government spending increases firms chose to purchases more investment goods

which of the following would increase output in the short run