If the financial innovations such as ATM machines make money demand less elastic than it was before, then a. the LM curve will become steeper. b. the LM curve will become flatter. c. both the IS and LM curves will become flatter. d. the LM curve will shift to the left. ANSWER A
Date: September 10th, 2020
The Solow model is ________. A) the basic model of how technology changes over time B) the foundation for the classical economic thought of Adam Smith C) one of the dominant explanations of the business cycle D) based on the notion of diminishing marginal product of capital and labor ANSWER D
Date: September 10th, 2020
When drawn against the real interest rate, output supply increases if A) current government expenses increase. B) future government expenses increase. C) current total factor productivity increases. D) the money supply increases. ANSWER C
Date: September 10th, 2020
A federal government surplus is said to exist in the event that ________. A) federal outlays are greater than federal revenues B) federal outlays are equal to federal revenues C) federal outlays are less than federal revenues D) any of the above conditions exists ANSWER C
Date: September 10th, 2020
Which of the following would be evidence against rational expectations? a. unpredictable changes in policy have real effects. b. new information leads to changes in output. c. the public never make mistakes with respect to price level predictions. d. changes in stock prices change much more often than new information becomes available. ANSWER D
Date: September 10th, 2020
The classical model is a model in which a. governmental policies are needed to ensure full employment. b. wages and prices are perfectly flexible. c. the public has perfect information. d. None of the above e. b and c ANSWER E
Date: September 10th, 2020
Which of the following statements is (are) incorrect? a. Consumption plays a central role in the Keynesian theory of income determination b. Consumer expenditure is the largest component of aggregate demand c. In recent years, consumption has totaled between 60 and 70 percent of GDP d. Keynes believed that investment was largely determined by expectations […]
Date: September 10th, 2020
Income taxes were made constitutional in the United States by the ________. A) Recovery Act of 2009 B) 16th Amendment to the U.S. Constitution C) Sherman Anti-Trust Act of 1890 D) Gramm-Leach-Bliley Act of 1999 ANSWER B
Date: September 10th, 2020
According to the Taylor rule, if actual output is greater than the natural rate of output, then the Fed should a. decrease inflation. b. increase interest rates. c. conduct open market sales. d. decrease interest rates. e. Both a and b ANSWER D
Date: September 10th, 2020
An increase in total factor productivity could be the result of A) adverse weather. B) the addition of new machinery. C) new hires. D) the introduction of new manufacturing methods. ANSWER D
Date: September 10th, 2020
