The intersection of aggregate demand and long-run aggregate supply identify the price level at which total planned A) government spending equals total planned tax revenues. B) real expenditures equal actual nominal GDP. C) real expenditures equal total planned production. D) export spending equals total planned import spending. ANSWER C
Gross public debt minus all government interagency borrowing is A) government budget deficit. B) an entitlement. C) U.S. Treasury bonds. D) net public debt. ANSWER D
Which of the following best explains why the federal tax rebates in 2008 and 2009 had almost no effects on aggregate demand? A) According to Ricardian equivalence theorem, those tax rebates did not affect aggregate demand because they were accompanied by more government spending. B) According to the permanent income hypothesis, those one-time tax rebates […]
John makes it a point to save a portion of his salary every month. Assuming all else equal, if the real interest rate increases, it is likely to cause: A) a downward movement along John’s credit supply curve. B) John’s credit supply curve to shift to the left. C) John’s credit supply curve to shift […]
Open market operations refer to the Fed’s transactions with ________. A) households B) private banks C) state governments D) firms ANSWER B
Zero correlation between two variables implies that: A) change in one variable causes the other to change. B) both variables move in the same direction. C) the variables are not related to each other. D) both variables move in the opposite direction. ANSWER C
________ is the market value of the final goods and services produced within the borders of a country during a particular period of time. A) Net Product Value B) Gross National Product C) Total Product D) Gross Domestic Product ANSWER D
Which of the following statements is true? A) The GDP per capita has almost been constant since the beginning of the 20th century in most of the western world. B) The average GDP per capita of a nation at a particular point of time is not the same as the income of all individuals in […]
A rightward shift in the supply curve of reserves held at the Fed ________. A) reduces the federal funds interest rate B) increases unemployment C) reduces the price level D) increases the tax rates ANSWER A
The purchasing power of the dollar A) varies directly with the purchasing power of other major currencies such as the euro and the Japanese yen. B) varies inversely with the price level. C) varies directly with the price level. D) varies directly with the price of gold. ANSWER B
