Econ: ch 20

During recessions, automatic stabilizers tend to make the governments budget A. Move toward deficit B. Move toward surplus C. Move toward balance D. Not necessarily move the budget in any particular direction

A

Which of the following is not a determinant of the long run level of real GDP? A. The price level B. The amount of capital used by firms C. Available stock of human capital D. Available technology

A

Which of the following shifts the long-run aggregate supply curve to the right? A. An increase in capital stock B. An increase in the money supply C. An increase in consumer confidence D. Tighter restrictions on international trade

A

Aggregate demand shifts left when the government A. Decreased taxes B. Cuts military expenditures C. Creates a new investment tax credit D. None of the above

B

Case 1: suppose the economy is in long-run equilibrium. Then because of corporate scandal, international tensions, and loss of confidence in policymakers, people become pessimistic regarding the future and retain that level of pessimism for some time. Which curve shifts and which direction? A. Aggregate demand shifts right B. Aggregate demand shifts left C. Aggregate supply shifts right D. Aggregate supply shifts left

B

If output is above its natural rate, then according to sticky-wage theory A. Workers and firms will strike bargains for higher wages. This increase in wages shifts the short run aggregate supply curve right B. Workers and firms will strike bargains for higher wages. This increase in wages shifts the short run aggregate supply curve left C. Workers and firms will strike bargains for lower wages. This decrease in wages shifts the short run aggregate supply curve right D. Workers and firms will strike bargains for lower wages. This decrease in wages shifts the short run aggregate supply curve left

B

The classical dichotomy and monetary neutrality are represented graphically by A. An upward sloping long run aggregate supply curve B. A vertical long run aggregate supply curve C. An upward sloping short run aggregate supply curve D. A downward sloping aggregate demand curve

B

Part of the explanation for why the aggregate demand curve slopes downward is that a decrease in the price level A. Decreases the value of money B. Increased the real value of the dollar in foreign exchange markets C. Decreases the interest rate D. All of the above

C

Which of the following shifts short run aggregate supply right? A. An increase in the price of oil B. An increase in wages C. A decrease in the price of oil D. An increase in the actual price level

C

Which of the following would cause investment spending to increase and aggregate demand to shift right? A. An increase In the money supply, but not an investment tax credit B. An investment tax credit but not an increase in the money supply C. Both an increase in the money supply and an investment tax credit D. None of the above

C

An economic expansion caused by a shift in aggregate demand remedies itself over time as the wage level A. Falls, shifting aggregate demand right B. Rises, shifting aggregate supply right C. Falls, shifting aggregate supply right D. Rises, shifting aggregate supply left

D

Case 1: suppose the economy is in long-run equilibrium. Then because of corporate scandal, international tensions, and loss of confidence in policymakers, people become pessimistic regarding the future and retain that level of pessimism for some time. How is the new long run equilibrium different from the original one? A. Both price and real GDP are higher B. Both price and real GDP are lower C. The price level is the same and GDP is lower D. The price level is lower and real GDP is the same

D

Case 1: suppose the economy is in long-run equilibrium. Then because of corporate scandal, international tensions, and loss of confidence in policymakers, people become pessimistic regarding the future and retain that level of pessimism for some time. What happens to the expected price level and what's the result for wage bargaining? A. The expected price level rises. Bargains are struck for higher wages B. The expected price level rises. Bargains are struck for lower wages C. The expected price level falls. Bargains are struck for higher wages D. The expected price level falls. Bargains are struck for lower wages

D

In 2001, the US was in recession. Which of the following things would you not expect to have happened? A. Increased layoffs and firings B. A higher rate of bankruptcy C. Increased claims for unemployment insurance D. Increased investment spending

D

Suppose there was a large increase in net exports. If the fed wanted to stabilize output, it could A. Increase the money supply, which will reduce interest rates B. Decrease the money supply, which will reduce interest rates C. Increase the money supply, which will increase interest rates D. Decrease the money supply, which will increase interest rates

D