Unit 4 Test
Refer to figure 33-10 If the economy starts at point C, stagflation would be consistent with point
D
According to classical macroeconomic theory, changes in the money supply affect
nominal variables, but not real variables// variables measured interns of money but not variables measured in terms of quantaties or relatives prices
Refer to figure 33-4 if the economy is A and there is a fall in aggregate demand in the short run the economy
Moves to D
Which of the following both shift aggregate demand right?
Net exports rise for some reason other than a price change and government purchase rise
Other things the same, a country could move from having a trade deficit to having a trade surplus if either
Saving fell or domestic investment rose
Refer to Figure 34-8. An increase in government purchases will
Shift aggregate demand from AD1 to AD2
Which of the following shifts aggregate demand to the left?
Stock prices fall/ decrease in money supply
Refer to figure 34-2 assume the money market is always in equilibrium. Under the assumption of the model
all of the above are correct (might find other answered)
Refer to figure 34-2 if the money supply curve MS on the left-hand graph were to shift to the left, this would
all of the above are correct (might find other answered)
Aggregate demand shifts left of
the price and the real GDP both fall
Other things the same, as the price level rises, the real value of dollar
the value of the dollar falls and interest rates rise//Rises,and interest rates fall..
A nations domestic investment is greater than its savings. Which of the following is correct?
this nation has a negative net capital outflow
Refers to figure 33-4 IF the economy starts at A, a decrease in the money supply moves the economy
to C in the long run
Refer to figure 33-7 Suppose the economy starts at Y. If aggregate demand increase from AD2 to AD3, then the economy moves to
v.
Refer to figure 33-8 Suppose the economy starts at Z. If changes occur that move the economy to a new short ran equilibrium of P3 and Y3, then it must be the case that.
The government implemented a tax cut
In the short run, an increase in the money supply causes interest rates to
decrease , and aggregate demand to shift right
Refer to the figure 34-2 If the graphs apply to the economy such as the U.S economy, then the slope of the AD curve is primarily, attributable to the
interest-rate effect
An increase in the expected price level shifts short-run aggregate supply to the
left, and an increase in the actual price level does not shift short-run aggregate supply
Refer to figure 34-2 What does Y represent on the horizontal axis of the right-hand graph?
real output
People hold money primarily because it
serves as a medium of exchange
Refer to figure 34-8 An increase in taxes will
shift aggregate demand from AD1A to AD3
Refer to figure 33-8 Suppose the economy starts at Z. If changes occur that move the economy to a new short ran equilibrium of P1 and Y1, then it must be the case that.
Aggregate demand has decreased
The county of Sylvania has a GDP of $900, investment of $200, and net capital outflow of $-100. What is consumption?
$600?
Menu costa help explain
(sticky- price theory)
If the MPC=0.5 and there is no crowding out, then the spending multiplier is
2
Refer to figure 34-4 Suppose the money-demand curve is currently MD1. If the current interest rate is R2, then
> people will respond by selling interest-bearing bonds or by withdrawing money from interest bank accounts
The aggregate supply curve is
>>shows the relationship between the aggregate price level and the quantity of aggregate output supplied in the economy
A decrease in government spending
>decrease in aggregate demand
The classical dichotomy and monetary neutrality are represented graphically
A vertical long-run aggregate-supply curve
Which of the following events shifts aggregate demand rightward?
An increase in government expenditures, but not a change in the price level.
Suppose an increase in interest rates causes rising unemployment and falling output. To counter this, the Federal Reserve would
Increase the money supply
Real GDP
The value of final g/s valued at base year price. For the base year, nominal GDP always equals real GDP
A tax increase has
both a crowding out and multiplier effect
Refer to figure 34-2 Assume of the money market is always in equilibrium and suppose R1=0.08; r2=0.12; Y 1=13.000; Y2= 10.000;P1=1.0, and P2=1.2. Which of the following statements is correct?
if the velocity of money is 4 when R=r2, then the quantity of money is $3,000
