Question 1

The level of GDP that corresponds to full employment in the labor market is called

Accepted Answer

A) potential GDP 
B) real GDP 
C) nominal GDP 
D) natural GDP 
E) GDP per capita 
A) potential GDP 
B) real GDP 
C) nominal GDP 
D) natural GDP 
E) GDP per capita

Question 2

In an AD-AS diagram with an upward-sloping AS-curve, if a tax decrease is combined with money expansion,

Accepted Answer

A) output will remain relatively unaffected but interest rates will decrease 
B) output will remain relatively unaffected but interest rates will definitely increase 
C) aggregate demand, the price level, and output will all decrease 
D) aggregate demand, the price level, and output will all increase 
E) the price level will increase but we can't say what will happen to output or interest rates 
A) output will remain relatively unaffected but interest rates will decrease 
B) output will remain relatively unaffected but interest rates will definitely increase 
C) aggregate demand, the price level, and output will all decrease 
D) aggregate demand, the price level, and output will all increase 
E) the price level will increase but we can't say what will happen to output or interest rates

Question 3

A decrease in nominal money supply will be reflected in

Accepted Answer

A) a shift of the AD-curve to the right 
B) a shift of the AD-curve to the left 
C) movement along the AD-curve from right to left 
D) movement along the AD-curve from left to right 
E) a shift of the AS-curve to the left 
A) a shift of the AD-curve to the right 
B) a shift of the AD-curve to the left 
C) movement along the AD-curve from right to left 
D) movement along the AD-curve from left to right 
E) a shift of the AS-curve to the left

Question 4

If output is at its full-employment level, then

Accepted Answer

A) the actual unemployment rate is zero 
B) the natural rate of unemployment is zero 
C) there are no frictions in the labor market since wages have reached their market-clearing level 
D) there is still some positive level of unemployment due to frictions in the labor market 
E) nobody who is currently employed is looking for a new job 
A) the actual unemployment rate is zero 
B) the natural rate of unemployment is zero 
C) there are no frictions in the labor market since wages have reached their market-clearing level 
D) there is still some positive level of unemployment due to frictions in the labor market 
E) nobody who is currently employed is looking for a new job

Question 5

When we say that potential GDP is exogenous with respect to the price level, we refer to

Accepted Answer

A) the fact that changes in real money balances cause output to rise 
B) the fact that the long-run AS-curve shifts to the right over time 
C) the short-run AS-curve 
D) the medium-run AS-curve 
E) the Keynesian AS-curve 
A) the fact that changes in real money balances cause output to rise 
B) the fact that the long-run AS-curve shifts to the right over time 
C) the short-run AS-curve 
D) the medium-run AS-curve 
E) the Keynesian AS-curve

Question 6

In which of the following cases is expansionary fiscal policy LEAST effective in increasing output?

Accepted Answer

A) if wages adjust rapidly to maintain equilibrium in the labor market 
B) if wages do not change much even when there is high unemployment 
C) if it is combined with expansionary monetary policy 
D) if we have a Keynesian AS-curve 
E) if the Fed is trying hard to keep interest rates from rising 
A) if wages adjust rapidly to maintain equilibrium in the labor market 
B) if wages do not change much even when there is high unemployment 
C) if it is combined with expansionary monetary policy 
D) if we have a Keynesian AS-curve 
E) if the Fed is trying hard to keep interest rates from rising

Question 7

The AD-AS diagram used in this chapter

Accepted Answer

A) is unrelated to the demand and supply diagram used in microeconomics 
B) uses the average price level of all goods and services we buy as "price" 
C) uses an AS-curve that is relatively more price elastic in the medium run than in the long run 
D) uses an AS-curve that is vertical in the long run and horizontal in the very short run 
E) all of the above 
A) is unrelated to the demand and supply diagram used in microeconomics 
B) uses the average price level of all goods and services we buy as "price" 
C) uses an AS-curve that is relatively more price elastic in the medium run than in the long run 
D) uses an AS-curve that is vertical in the long run and horizontal in the very short run 
E) all of the above

Question 8

In the Keynesian aggregate supply curve case,

Accepted Answer

A) firms will always supply the amount of goods demanded at the existing price level 
B) consumers will demand whatever is supplied by firms at each price 
C) the economy is always at full employment 
D) unemployment is always at its natural rate 
E) none of the above 
A) firms will always supply the amount of goods demanded at the existing price level 
B) consumers will demand whatever is supplied by firms at each price 
C) the economy is always at full employment 
D) unemployment is always at its natural rate 
E) none of the above

Question 9

Assume you mistakenly buried a $100 bill in a time capsule in 1970 and dug it up again in 2012.What would be its real purchasing power ?

Accepted Answer

A) $122 
B) $100 
C) $88 
D) $42 
E) $17 
A) $122 
B) $100 
C) $88 
D) $42 
E) $17

Question 10

Frictional unemployment is defined as

Accepted Answer

A) all unemployment above the natural rate 
B) unemployment that is cyclical in nature 
C) the natural unemployment rate minus cyclical unemployment 
D) unemployment resulting from people shifting between jobs and looking for new jobs 
E) any unemployment that is above 6% 
A) all unemployment above the natural rate 
B) unemployment that is cyclical in nature 
C) the natural unemployment rate minus cyclical unemployment 
D) unemployment resulting from people shifting between jobs and looking for new jobs 
E) any unemployment that is above 6%

The level of GDP that corresponds to full employment in the labor market is called

In an AD-AS diagram with an upward-sloping AS-curve, if a tax decrease is combined with money expansion,

A decrease in nominal money supply will be reflected in

If output is at its full-employment level, then

When we say that potential GDP is exogenous with respect to the price level, we refer to

In which of the following cases is expansionary fiscal policy LEAST effective in increasing output?

The AD-AS diagram used in this chapter

In the Keynesian aggregate supply curve case,

Assume you mistakenly buried a $100 bill in a time capsule in 1970 and dug it up again in 2012.What would be its real purchasing power ?

Frictional unemployment is defined as

Introduction

National income accounting

Growth and accumulation

Growth and policy

Aggregate supply and the phillips curve

Unemployment

Inflation

Policy preview

Income and spending

Money, interest, and income

Monetary and fiscal policy

International linkages

Consumption and saving

Investment spending

The demand for money

The fed, money, and credit

Policy

Financial markets and asset prices

The national debt

Recession and depression

Inflation and hyperinflation

International adjustment and interdependence

Advanced topics

Filters

Exam 5: Aggregate supply and demand

The level of GDP that corresponds to full employment in the labor market is called

In an AD-AS diagram with an upward-sloping AS-curve, if a tax decrease is combined with money expansion,

A decrease in nominal money supply will be reflected in

If output is at its full-employment level, then

When we say that potential GDP is exogenous with respect to the price level, we refer to

In which of the following cases is expansionary fiscal policy LEAST effective in increasing output?

The AD-AS diagram used in this chapter

In the Keynesian aggregate supply curve case,

Assume you mistakenly buried a $100 bill in a time capsule in 1970 and dug it up again in 2012.What would be its real purchasing power ?

Frictional unemployment is defined as

Introduction

National income accounting

Growth and accumulation

Growth and policy

Aggregate supply and the phillips curve

Unemployment

Inflation

Policy preview

Income and spending

Money, interest, and income

Monetary and fiscal policy

International linkages

Consumption and saving

Investment spending

The demand for money

The fed, money, and credit

Policy

Financial markets and asset prices

The national debt

Recession and depression

Inflation and hyperinflation

International adjustment and interdependence

Advanced topics

Filters