MACROECONOMICS EXAM 3 CLICKER QUESTIONS

Which of the following in NOT an example of institution? A. Social customs and work habits B. relationship between citizens and government C. significant national monuments D. laws and regulations E. type of government

C. significant national monuments

Which of the following is true? A. The United States generally has a budget surplus. B. National debt is the same as deficit. C. The national debt is the sum of yearly budget deficits. D. A deficit will occur when revenues exceed outlays.

C. the national debt is the sum of yearly budget deficits

Suppose there is a decrease in AD, causing a price level to decrease; what will happen in the long run as prices adjust? A. The price level will go back to its previous level. B. The price level will rise even further. C. The price level will fall even further D. The price level will rise slightly to a level somewhere between its current level and the original level.

C. the price level will fall even further

Suppose you take $500 out of your savings account and put it in your checking account. What is the overall effect on M1 and M2? A. M1 rises, and M2 is unchanged. B. M1 is unchanged, and M2 is unchanged. C. M1 is unchanged, and M2 falls. D. M1 rises, and M2 falls.

A. M1 rises, and M2 is unchanged.

Which of the following is part of mandatory outlays? A. Social Security B. defense spending C. government employee salaries D. infrastructure maintenance

A. Social Security

According to the interest rate effect, all else equal, a lower price level leads to A. more savings, lower interest rates and a higher AD. B. higher interest rates and a higher AD. C. lower interest rates and a lower AD. D. less savings, higher interest rates and lower AD

A. more savings, lower interest rates and a higher AD

Income taxes in the United States can be described as: A. progressive. B. regressive. C. flat. D. U-shaped.

A. progressive

Land, labor and capital are considered: A. resources B. technology C. institutions D. investments

A. resources

Why is the LRAS curve vertical? A. The short run sets a given output that will remain in the long run. B. Long-term output can only increase at a specific equilibrium price level. C. Prices have nothing to do with long-term output. D. Unemployment is zero in the long run.

C. prices have nothing to do with long-term output

Which of the following is an example of an automatic stabilizer? A. Federal Reserve interest rates B. discretionary outlays C. progressive income taxes D. education subsidies

C. progressive income taxes

Which of the following is an example of contractionary fiscal policy? A. decreasing the money supply B. increasing the interest rate C. increasing government spending D. increasing taxes

D. increasing taxes

Which of the following factors is positively correlated with economic growth? A. Collectively owned resources B. High barriers to trade C. Restrictions on immigration D. Political stability and rule of law E. High rates of inflation

D. political stability and rule of law

With the AD-AS graph, what variable is on the vertical axis? A. national income B. the price of the good we are studying C. the price of labor D. the price level

D. the price level

If the unemployment rate falls below the natural rate of unemployment (u*), A) the government will want to conduct expansionary fiscal policy. B) the Federal Reserve will want to conduct expansionary monetary policy C) the economy is in a recession D) there will be no worries about inflation E) the government will want to conduct contractionary fiscal policy

E) the government will want to conduct contractionary fiscal policy

The AD-AS model shows an economy in a recession when A. AD < SRAS. B. AD = SRAS < LRAS. C. AD < SRAS. D. AD = SRAS < LRAS.

B. AD = SRAS < LRAS

If real-estate prices in the United States fall, this leads to A. an increase in U.S. wealth and an increase in AD. B. a decline in U.S. wealth and an increase in AD. C. a decline in U.S. wealth and a decrease in AD. D. a fall in the value of dollar and a decrease in AD

B. a decline in U.S. wealth and an increase in AD

According to the Laffer curve, increasing tax rates A. will always increase tax revenue. B. could increase or decrease tax revenue. C. will always decrease tax revenue. D. will never change tax revenues.

B. could increase or decrease tax revenue.

Today in the United States, the dollar ($) is: A. intrinsically valued money. B. fiat money. C. commodity money. D. commodity-backed money.

B. fiat money.

Social Security and Medicare outlays: A. are funded by income tax. B. have increased in size recently. C. are used to make sure working-age adults stay healthy. D. are part of discretionary spending.

B. have increased in size recently

Which of the following is not one of the three time lags affecting fiscal policy? A. recognition lag B. hindsight lag C. implementation lag D. impact lag

B. hindsight lag

Which of the following is an example of expansionary fiscal policy? A. increase in taxes B. stimulus package C. increasing the money supply D. lowering interest rates

B. stimulus package

Consider just the AD curve. Suppose interest rates fall due to changing economic conditions. This will cause A. a movement along the AD curve. B. the AD curve to shift outward. C. the slope of the AD curve to get steeper. D. a decrease in the price level of the economy.

B. the AD curve to shift outward

The wealth effect can help explain A. the positive slope of the AS curve. B. the negative slope of the AD curve. C. the difference between real and nominal GDP. D. the rate of economic growth.

B. the negative slope of the AD curve

Use the following tax rates to compute the tax bill for a person who earns $20,000: Taxable Income Tax Rate $0-$8,000 10% $8,001-$25,000 20% $25,001 and up 30% A) 20% B) $4,000 C) $3,200 D) $1,000

C. $3,200

In 2010-2015, Greece experienced a severe financial crisis and economic downturn. What do you think was a cause? A. Greek economy was harmed by lack of international trade B. Greek economy was harmed by lack of natural resources C. Greek economy was harmed by inefficient and high taxation. D. Greek economy was harmed by high levels of immigration from Syria and Iraq

C. Greek economy was harmed by inefficient and high taxation

According to the wealth effect, all else equal, a lower price level leads to A. lower savings and a lower AD. B. lower investment and a lower AD. C. higher real-wealth values and a higher AD. D. higher investment and a higher AD.

C. higher real-wealth values and a higher AD

Countercyclical fiscal policy consists of using expansionary fiscal policy A) during times of expansion and contractionary fiscal policy during times of recession B) during times of recession and contractionary fiscal policy during times of recession C) during times of expansion and contractionary fiscal policy during times of expansion D) during times of recession and contractionary fiscal policy during times of expansion E) and contractionary fiscal policy at the same time

D) during times of recession and contractionary fiscal policy during times of expansion

If the quantity of money in the economy doubled tonight, the result for the economy would be A) nothing; money is just paper. B) great; we would get a boost from the extra money, and this would lead to more real GDP and more jobs. C) awful; we would experience inflation, which is harmful for economic growth. D) mixed; we would experience a boost in the short run but inflation in the long run

D) mixed; we would experience a boost in the short run but inflation in the long run

Suppose the MPC is 0.9. What will the total GDP impact be of a $400 billion increase in government spending [G]? A. $360 billion B. $760 billion C. $1 trillion D. $4 trillion

D. $4 trillion

If your marginal tax rate is 25%, your taxable income is $60,000, and your tax bill is $4,800, then your average tax rate is A) 20% B) 12% C) 10% D) 8%

D. 8%

Which of the following, holding all else constant, will certainly cause the aggregate demand curve to shift to the left? A. an increase in exports B. a decrease in imports C. an increase in both exports and imports D. an appreciation of dollar E. a depreciation of dollar

D. an appreciation of dollar

Suppose currently economy is producing below its potential GDP. The appropriate policy in this case is ____, which would shift aggregate demand _____. A. contractionary; left B. contractionary; right C. expansionary; left D. expansionary; right

D. expansionary; right

Assume that in a given year a country takes in $1.2 billion in taxes but spends $2.3 billion. With certainty we can say that the government debt A) is more than $1.1 billion. B) is $1.1 billion. C) increased by $2.3 billion. D) increased by $1.1 billion.

D. increased by $1.1 billion