What was the Industrial Revolution? How did it contribute to modern economic growth? What will be an ideal response? ANSWER Industrial Revolution is the term used for describing the series of innovation and their implementation in the production process that started to take place at the end of the 18th century in Britain. The […]
Refer to the above figure. If the price level is 80 A) the total planned real expenditures by individuals, businesses, and the government are less than total planned production by firms. B) the aggregate demand curve will automatically shift leading to a stable equilibrium. C) the economy will have economic growth and the new equilibrium […]
To the extent that the Ricardian equivalence theorem is true, which of the conditions below will hold? A) Increases in the government budget deficit will not affect aggregate demand. B) Investment spending will not be considered part of aggregate demand. C) The long-run aggregate supply curve will not be vertical. D) Exports will not be […]
Economic growth takes place A) only if the price level is constant or rising. B) when aggregate demand decreases. C) only when both aggregate demand and aggregate supply increase. D) when aggregate supply increases. ANSWER D
Assuming all else equal, a decrease in the real interest rate will cause: A) an upward movement along the credit supply curve. B) a downward movement along the credit supply curve. C) the credit supply curve to shift to the right. D) the credit supply curve to shift to the left. ANSWER B
What can be expected to happen in a country that enacts trade barriers? A) The rate of population growth will decrease. B) The rate of economic growth will decrease. C) The rate of immigration will increase. D) The rate of technological innovation will increase. ANSWER B
The transaction demand for money varies A) directly with the interest rate. B) directly with nominal GDP. C) inversely with nominal GDP only. D) inversely with nominal GDP and real GDP. ANSWER B
People demand money for all of the following reasons EXCEPT A) it generates a rate of return. B) it is a medium of exchange to make payments. C) it is a store of value. D) it can meet unplanned expenditures. ANSWER A
National accounts measure ________. A) the labor force participation rate in a country B) the total amount of capital goods available in a country C) the level of aggregate economic activity in a country D) the total money supply in a country ANSWER C
If the Fed increases the supply of bank reserves, ________. A) consumption falls B) investment falls C) the federal funds rate falls D) the inflation rate falls ANSWER C
