Some economists believe that a positive aggregate demand shock to an economy with large amounts of excess capacity and unemployment does not necessarily cause an increase in prices. Economists who adhere to this belief are followers of A) Keynesian economics. B) Say’s laws of economics. C) classical economics. D) supply-side economics. ANSWER A
When the price level goes up, the purchasing power of the dollar A) varies directly with the value of the euro. B) remains constant. C) also increases. D) falls. ANSWER D
If the horizontal axis measures the quantity of bank reserves and the vertical axis measures the interest rate, the demand curve for bank reserves ________. A) slopes up B) is perfectly elastic C) slopes down D) is perfectly inelastic ANSWER C
Assuming all else equal, any change that causes an increase in the credit supply at a given real interest rate will cause: A) the credit supply curve to shift to the left. B) a downward movement along the credit supply curve. C) an upward movement along the credit supply curve. D) the credit supply curve […]
Which of the following relationships is likely to exhibit negative correlation? A) The relationship between inflation in the U.S. and traffic congestion in China B) The relationship between amount saved with a bank and the interest earned C) The relationship between the amount of precipitation in a year and the number of umbrellas sold D) […]
Which of the following statements has been proposed as a benefit of passive policy making? A) When using passive policy making there is no tradeoff between price stability and unemployment. B) Passive policy making allows for making immediate changes in response to an anticipated change in economic performance. C) Passive policy making utilizes the rational […]
If no foreign residents owned any of the U.S. public debt, then it would be true that A) U.S. residents would essentially owe the public debt to themselves. B) there would be no distributional consequences associates with he public debt. C) there would be no interest payments on the public debt. D) the public debt […]
Which of the following statements is true of inequality in the U.S. economy? A) Inequality in the U.S. economy is now less than what it was in the year 1950. B) Inequality in the U.S. economy is now higher than what it was in the year 1950. C) Inequality in the U.S. economy had increased […]
As real Gross Domestic Product (GDP) decreases, people hold A) about the same amount of money since that has been enough in the past. B) less money because they will want to collect interest. C) more money because they will want to increase the amount of savings. D) less money since they will make fewer […]
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
