In the classical model, what is the impact of changes in the demand for goods and services on aggregate output? Do they affect any real variables? What will be an ideal response? ANSWER Factors such as the quantity of money, the level of government spending, and the level of demand for investment goods by […]
Date: September 10th, 2020
Management of expectations by a central bank is based on the view that ________. A) decreasing the federal funds rate will lead to a reduction in the discount rate B) if economic agents believe that the price of an individual asset will rise in the future, they will buy that asset today, contributing to its […]
Date: September 10th, 2020
The proposition that the amount of goods and services produced in an economy in the long run is not affected by the price level is known as the ________. A) neutrality of money B) classical dichotomy C) quantity theory of money D) Fisher effect E) none of the above ANSWER B
Date: September 10th, 2020
Saying the consumer is rational means A) the consumer is a stand-in for all consumers. B) the consumer is getting rationed. C) the consumer makes reasonable choices. D) the consumer makes the best choices. ANSWER D
Date: September 10th, 2020
Let C = 200 + .8(Y-T), planned investment equals 150, and T equals 200 . If the equilibrium level of income is 2,000, then the level of government spending needed to make this true is a. 210. b. 250. c. 50. d. 10. e. none of the above. ANSWER A
Date: September 10th, 2020
In the long run ________. A) the amount of output an economy can produce is determined by real variables like capital, labor and technological advances B) aggregate supply is fixed at the potential level of output C) there is enough time for prices to fully adjust so the classical dichotomy holds D) all of the […]
Date: September 10th, 2020
If people increase their expected rate of interest, the speculative demand for money curve will _____ and money supply will _____. a. shift downward, remain unchanged. b. shift upward; remain unchanged. c. not be affected; shifts upward. d. not be affected; not be affected. ANSWER A
Date: September 10th, 2020
If the consumption function is given by C = 100 + 0.75(Y-T), then an increase of 10 units in taxes will cause the IS schedule to shift to the right by a. -30 units. b. -10 units. c. 30 units. d. 40 units. ANSWER A
Date: September 10th, 2020
How do you suppose most people form an expectation of future inflation? Is that method consistent with the assumption of adaptive expectations? What will be an ideal response? ANSWER Like any mechanic in the Bronx, most people distil a “gut opinion” from their personal experience and what they read in the papers, hear from […]
Date: September 10th, 2020
In a fully-funded social security program A) the young pay for the benefits of the old. B) the young are forced to save for their own retirement. C) the young have to buy bonds for the old. D) the young are forced to save for the retirement of the old. ANSWER B
Date: September 10th, 2020
