In the classical model, a tax on labor supply will a. decrease the demand for labor, increase the real wage, decrease output, and reduce the price level. b. decrease the supply of labor, increase real wages, decrease output, and increase the price level. c. decrease the demand for labor, the real wage, decrease output, and […]
Hyperinflations are caused by a. persistant falls in aggregate supply. b. increases in poverty levels. c. high levels of money growth over sustained periods of time. d. falls in the velocity of money. ANSWER C
Animal skins, livestock, tobacco, teeth and rocks have historically served as a medium of exchange, unit of account, store of value and method of deferred payment. Indicate whether the statement is true or false ANSWER TRUE
By fixing the mint price of gold among commercial nations under the Gold Standard, the exchange rate risk falls significantly, thus encouraging trade. Indicate whether the statement is true or false ANSWER TRUE
According to the monetarists and new classical economists, a. only anticipated monetary policy actions will affect output and employment in the short run. b. only unforeseen monetary policy actions will affect output and employment in the short run. c. both anticipated and unanticipated monetary policy actions will affect output and employment in the short run. […]
Printing money was the main method the Union government used to finance the Civil War (1861–1865), and as a result the money supply in the North rose by a factor of 4. Indicate whether the statement is true or false ANSWER TRUE
The public-choice view states that a. all governments are bad and should be abolished. b. macroeconomic policymakers are only interested in the social good. c. policymakers in the public sector work for the public, whereas policymakers in the private sector have private interests. d. macroeconomic policymakers act to maximize their own welfare rather than acting […]
The Keynesian aggregate demand curve slopes downward because for any given money supply, an increase in the price level ______ real money holdings which _____ the interest rate and _____ income. a. increases; lowers; increases b. reduces; raises; reduces c. reduces; lowers; increases d. increases; raises; reduces ANSWER B
Some economists argue that unemployment compensation increases the natural rate of unemployment because it increases the amount of time people spending finding new work while without work. Additionally, it makes unemployment more visible with the steady growth in urbanization. Indicate whether the statement is true or false ANSWER TRUE
The classically-based models (classical, new classical, monetarist, real business cycle) all agree that a. markets always clear. b. monetary policy can affect output in the short-run but not the long-run. c. changes in aggregate drive most changes in output. d. stabilization policy is ineffective. e. None of the above ANSWER D
