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