Macro Final Exam
According to the interest-rate effect, an increase in the price level will
if other factors are held constant, will lead to a reduction in total real spending on interest-rate-sensitive goods.
People will buy more if the price level
if the price level falls, the real value of a dollar rises
During the 2008-2009 unemployment rose from about 4.4% to about
unemployment rose 4.4% to 10.1%
If the MPC is 0.8 and there are no crowding-out or accelerator effects, then an initial increase in aggregate demand of $120 billion will eventually shift the aggregate demand curve to the right by
$600 billion.
For the U.S. economy, which of the following helps explain the slope of the aggregate-demand curve?
An increase in the price level increases the interest rate.
If the MPC = 4/5, then the government purchases multiplier is 5/4
False
According to liquidity preference theory, if the price level increases, then the equilibrium interest rate
Liquidity preference theory assumes the interest rate adjusts to bring the money market into equilibrium
When there is an excess supply of money
There is an excess demand for bonds, so those looking to borrow by selling bonds can do so at a lower interest rate
According to the classical model, an increase in the money supply causes
_______ prices and ______ in output. higher; no change
Which of the following events would shift money demand to the left?
a decrease in the price level
. During the last half of 2012, the U.S. unemployment rate was just under 8 percent. Historical experience suggests that this is
above the natural rate, so that real GDP growth was likely low
When the price level falls the quantity of
consumption goods demanded and the quantity of net exports demanded both rise
During recessions declines in investment account for about
d. 2/3 of the decline in real GDP
Other things the same, if the money supply rises by 2% and people were expecting it to rise by 5%, then some firms have
lower than desired prices, which leads to an increase in the aggregate quantity of goods and services supplied
In the long run, an increase in the stock of human capital
makes the price level fall, while increases in the money supply make prices rise
When the Federal Reserve increases the Federal Funds target rate, it achieves this target by
selling Treasury bills, which decreases bank reserves
In order to understand how the economy works in the short run, we need to
study a model in which real and nominal variables interact
Other things the same, the aggregate quantity of goods demanded decreases if
the dollar depreciates