Econ Quiz 6

When the ________ increases, then potential output increases. A) long-run aggregate demand B) long-run aggregate supply C) short-run aggregate demand D) short-run aggregate supply

long-run aggregate supply

If interest rates are positive, one dollar today is worth A) more than a dollar a year from now. B) the same as a dollar a year from now. C) less than a dollar a year from now. D) nothing.

more than a dollar a year from now.

The aggregate production function is the mathematical representation of the technological relationship between A) the rate of capital accumulation and national output. B) national output and fiscal policy. C) fiscal and monetary policy changes and national output. D) national output and inputs.

national output and inputs.

The aggregate demand curve shows a ________ relationship between ________ and aggregate output ________. A) negative; the price level; supplied B) negative; the price level; demanded C) positive; the price level; demanded D) positive; the interest rate; demanded

negative; the price level; demanded

Firms can finance capital spending by doing all of the following EXCEPT A) paying dividends. B) selling stock in the company. C) borrowing from a bank. D) issuing bonds.

paying dividends.

With a fixed amount of capital, 300 workers produce 9,000 cars. The average labor productivity is A) 0.03. B) 3. C) 27. D) 30.

30

Refer to Figure 12.8. Suppose the economy is currently at Point A producing potential output Y0. If the government increases spending, the economy moves to Point ________ in the short-run and to Point ________ in the long-run. A) C; B B) B; D C) D; E D) B; C

B; C

When the aggregate supply curve is vertical, which of the following is NOT true? A) Any increase in the price level will not cause an increase in aggregate output. B) The economy is producing the maximum sustainable level of output. C) The economy is expanding quickly. D) The economy is at capacity.

The economy is expanding quickly.

Refer to Figure 17.1. Economic growth is represented by A) a shift in the production possibilities frontier from ppf2 to ppf1. B) a movement from Point B to Point A. C) a movement from Point A to Point B along ppf1. D) a movement from Point B to Point C.

a movement from Point B to Point C.

The time it takes for a new economic policy to affect behavior in the economy is A) a recognition lag. B) an implementation lag. C) a response lag. D) none of the above

a response lag.