Question 1

For an economy, aggregate demand equals

Accepted Answer

A)  consumption plus investment plus government purchases plus exports. 
B)  consumption plus investment plus government purchases plus (exports minus imports). 
C)  consumption plus investment plus (taxes minus transfers) plus (exports minus imports). 
D)  consumption plus investment plus government purchases plus (imports minus exports). 
A)  consumption plus investment plus government purchases plus exports. 
B)  consumption plus investment plus government purchases plus (exports minus imports). 
C)  consumption plus investment plus (taxes minus transfers) plus (exports minus imports). 
D)  consumption plus investment plus government purchases plus (imports minus exports).

Question 2

The market for labor services is included in the

Accepted Answer

A)  loanable funds market. 
B)  goods and services market. 
C)  resource market. 
D)  financial market. 
A)  loanable funds market. 
B)  goods and services market. 
C)  resource market. 
D)  financial market.

Question 3

If equilibrium is present in the foreign exchange market and a nation is experiencing a trade surplus,

Accepted Answer

A)  the nation must be experiencing a net capital inflow. 
B)  the nation must be experiencing a net capital outflow. 
C)  the nation's inflation rate must increase. 
D)  the nation's interest rate must increase. 
A)  the nation must be experiencing a net capital inflow. 
B)  the nation must be experiencing a net capital outflow. 
C)  the nation's inflation rate must increase. 
D)  the nation's interest rate must increase.

Question 4

When the loanable funds and foreign exchange markets are in equilibrium,

Accepted Answer

A)  there are no leakages from the circular flow of income. 
B)  macro equilibrium cannot occur. 
C)  the leakages from the circular flow will equal the injections into it. 
D)  injections into the circular flow will exceed leakages from it. 
A)  there are no leakages from the circular flow of income. 
B)  macro equilibrium cannot occur. 
C)  the leakages from the circular flow will equal the injections into it. 
D)  injections into the circular flow will exceed leakages from it.

Question 5

If the actual price level exceeds the expected price level reflected in long-term contracts,

Accepted Answer

A)  many firms will find production more profitable than they had expected and will increase the quantity of output supplied. 
B)  many firms will find production less profitable than they had expected and will decrease the quantity of output supplied. 
C)  many firms will find production more profitable than they had expected and will decrease the quantity of output supplied. 
D)  many firms will find production less profitable than they had expected and will increase the quantity of output supplied. 
A)  many firms will find production more profitable than they had expected and will increase the quantity of output supplied. 
B)  many firms will find production less profitable than they had expected and will decrease the quantity of output supplied. 
C)  many firms will find production more profitable than they had expected and will decrease the quantity of output supplied. 
D)  many firms will find production less profitable than they had expected and will increase the quantity of output supplied.

Question 6

Why do we use two supply curves in the aggregate goods and services market? What is the difference between them, and why do they have different slopes?

Accepted Answer

Aggregate supply is divided into two sup

Question 7

Falling interest rates cause the market value of previously issued bonds to

Accepted Answer

A)  rise. 
B)  fall. 
C)  remain unchanged. 
D)  increase during periods of inflation but decline during periods of deflation. 
A)  rise. 
B)  fall. 
C)  remain unchanged. 
D)  increase during periods of inflation but decline during periods of deflation.

Question 8

Ceteris paribus, a decrease in the U.S. price level will cause

Accepted Answer

A)  an increase in U.S. exports. 
B)  an increase in U.S. imports. 
C)  the aggregate demand curve to shift to the right. 
D)  the aggregate demand curve to shift to the left. 
A)  an increase in U.S. exports. 
B)  an increase in U.S. imports. 
C)  the aggregate demand curve to shift to the right. 
D)  the aggregate demand curve to shift to the left.

Question 9

When the actual GDP equals the full-employment level of GDP, the

Accepted Answer

A)  economy is in long-run equilibrium. 
B)  price level must be rising. 
C)  expected inflation must be zero. 
D)  aggregate supply curve is not constrained by the scarcity of resources. 
A)  economy is in long-run equilibrium. 
B)  price level must be rising. 
C)  expected inflation must be zero. 
D)  aggregate supply curve is not constrained by the scarcity of resources.

Question 10

An unexpected sharp reduction in inflation will most likely result in

Accepted Answer

A)  the rapid growth of output and employment. 
B)  a reduction in the actual rate of unemployment. 
C)  a reduction in the natural rate of unemployment. 
D)  a temporary increase in unemployment and a decline in real output. 
A)  the rapid growth of output and employment. 
B)  a reduction in the actual rate of unemployment. 
C)  a reduction in the natural rate of unemployment. 
D)  a temporary increase in unemployment and a decline in real output.

Question 11

The short-run aggregate supply curve shows the relationship between

Accepted Answer

A)  the general level of prices and the quantity of goods and services purchased by all consumers in the economy. 
B)  the general level of prices and the quantity of goods and services that domestic firms will supply. 
C)  the interest rate and the quantity of goods and services that domestic firms will supply. 
D)  the money supply and the quantity of goods and services that domestic firms will supply. 
A)  the general level of prices and the quantity of goods and services purchased by all consumers in the economy. 
B)  the general level of prices and the quantity of goods and services that domestic firms will supply. 
C)  the interest rate and the quantity of goods and services that domestic firms will supply. 
D)  the money supply and the quantity of goods and services that domestic firms will supply.

Question 12

If the dollar appreciates relative to the Yen, it can be said that

Accepted Answer

A)  Japanese citizens respect the United States more. 
B)  the dollar increases in value within the United States. 
C)  the Yen depreciates relative to the dollar. 
D)  it takes more dollars to buy Yen. 
A)  Japanese citizens respect the United States more. 
B)  the dollar increases in value within the United States. 
C)  the Yen depreciates relative to the dollar. 
D)  it takes more dollars to buy Yen.

Question 13

Which of the following equations is accurate?

Accepted Answer

A)  money interest rate = real interest rate − inflationary premium 
B)  real interest rate = money interest rate + inflationary premium 
C)  real interest rate = money interest rate − inflationary premium 
D)  real interest rate = money interest rate 
A)  money interest rate = real interest rate − inflationary premium 
B)  real interest rate = money interest rate + inflationary premium 
C)  real interest rate = money interest rate − inflationary premium 
D)  real interest rate = money interest rate

Question 14

The exchange rate is

Accepted Answer

A)  another term for "interest rate." 
B)  another term for "growth rate." 
C)  the rate at which goods trade for one another across international borders. 
D)  the price of one currency in terms of another currency. 
A)  another term for "interest rate." 
B)  another term for "growth rate." 
C)  the rate at which goods trade for one another across international borders. 
D)  the price of one currency in terms of another currency.

Question 15

If the actual price level is lower than the expected price level reflected in long-term contracts,

Accepted Answer

A)  many firms will find production more profitable than they had expected and will increase the quantity of output supplied 
B)  many firms will find production less profitable than they had expected and will decrease the quantity of output supplied 
C)  many firms will find production more profitable than they had expected and will decrease the quantity of output supplied 
D)  many firms will find production less profitable than they had expected and will increase the quantity of output supplied 
A)  many firms will find production more profitable than they had expected and will increase the quantity of output supplied 
B)  many firms will find production less profitable than they had expected and will decrease the quantity of output supplied 
C)  many firms will find production more profitable than they had expected and will decrease the quantity of output supplied 
D)  many firms will find production less profitable than they had expected and will increase the quantity of output supplied

Question 16

If scientific research produces a technological breakthrough in the production of computer memory, then

Accepted Answer

A)  business costs will increase, profits will fall, and production will decrease. 
B)  business costs will fall, but profits will also fall, and production will decrease. 
C)  business costs will fall, profits will improve, and production will increase. 
D)  profits will increase because businesses will cut back production. 
A)  business costs will increase, profits will fall, and production will decrease. 
B)  business costs will fall, but profits will also fall, and production will decrease. 
C)  business costs will fall, profits will improve, and production will increase. 
D)  profits will increase because businesses will cut back production.

Question 17

Marquis borrowed $1,000 from Ayana for a year and agreed to repay her $1,050 at the end of the year. If the inflation rate was 3 percent, what is the real rate of interest Ayana received?

Accepted Answer

A)  10 percent 
B)  5 percent 
C)  3 percent 
D)  2 percent 
E)  −2 percent 
A)  10 percent 
B)  5 percent 
C)  3 percent 
D)  2 percent 
E)  −2 percent

Question 18

The vertical long-run aggregate supply curve reflects the fact that in the long run, an increase in the price level

Accepted Answer

A)  will not alter the economy's maximum sustainable rate of output. 
B)  will increase the economy's maximum sustainable rate of output. 
C)  will reduce the quantity of goods and services purchasers will demand. 
D)  will improve the overall efficiency of resource use. 
A)  will not alter the economy's maximum sustainable rate of output. 
B)  will increase the economy's maximum sustainable rate of output. 
C)  will reduce the quantity of goods and services purchasers will demand. 
D)  will improve the overall efficiency of resource use.

Question 19

What are the three reasons why the aggregate demand curve slopes downward? Give an example of each.

Accepted Answer

The real balance effect occurs because a

Question 20

If the price level in the current period is higher than what buyers and sellers anticipated,

Accepted Answer

A)  profit margins will be unattractive and firms will expand output. 
B)  profit margins will be unattractive and firms will reduce output. 
C)  profit margins will be attractive and firms will expand output. 
D)  profit margins will be attractive and firms will reduce output. 
A)  profit margins will be unattractive and firms will expand output. 
B)  profit margins will be unattractive and firms will reduce output. 
C)  profit margins will be attractive and firms will expand output. 
D)  profit margins will be attractive and firms will reduce output.

For an economy, aggregate demand equals

The market for labor services is included in the

If equilibrium is present in the foreign exchange market and a nation is experiencing a trade surplus,

When the loanable funds and foreign exchange markets are in equilibrium,

If the actual price level exceeds the expected price level reflected in long-term contracts,

Why do we use two supply curves in the aggregate goods and services market? What is the difference between them, and why do they have different slopes?

Falling interest rates cause the market value of previously issued bonds to

Ceteris paribus, a decrease in the U.S. price level will cause

When the actual GDP equals the full-employment level of GDP, the

An unexpected sharp reduction in inflation will most likely result in

The short-run aggregate supply curve shows the relationship between

If the dollar appreciates relative to the Yen, it can be said that

Which of the following equations is accurate?

The exchange rate is

If the actual price level is lower than the expected price level reflected in long-term contracts,

If scientific research produces a technological breakthrough in the production of computer memory, then

Marquis borrowed $1,000 from Ayana for a year and agreed to repay her $1,050 at the end of the year. If the inflation rate was 3 percent, what is the real rate of interest Ayana received?

The vertical long-run aggregate supply curve reflects the fact that in the long run, an increase in the price level

What are the three reasons why the aggregate demand curve slopes downward? Give an example of each.

If the price level in the current period is higher than what buyers and sellers anticipated,

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Taking the Nations Economic Pulse

Economic Fluctuations, Unemployment, and Inflation

Dynamic Change, Economic Fluctuations, and the Ad--As Model

Fiscal Policy: The Keynesian View and the Historical Development of Macroeconomics

Fiscal Policy: Incentives, and Secondary Effects

Money and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, Output, and Employment

Creating an Environment for Growth and Prosperity

Institutions, Policies, and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Special Topics

Filters

Exam 9: An Introduction to Basic Macroeconomic Markets

For an economy, aggregate demand equals

The market for labor services is included in the

If equilibrium is present in the foreign exchange market and a nation is experiencing a trade surplus,

When the loanable funds and foreign exchange markets are in equilibrium,

If the actual price level exceeds the expected price level reflected in long-term contracts,

Why do we use two supply curves in the aggregate goods and services market? What is the difference between them, and why do they have different slopes?

Falling interest rates cause the market value of previously issued bonds to

Ceteris paribus, a decrease in the U.S. price level will cause

When the actual GDP equals the full-employment level of GDP, the

An unexpected sharp reduction in inflation will most likely result in

The short-run aggregate supply curve shows the relationship between

If the dollar appreciates relative to the Yen, it can be said that

Which of the following equations is accurate?

The exchange rate is

If the actual price level is lower than the expected price level reflected in long-term contracts,

If scientific research produces a technological breakthrough in the production of computer memory, then

Marquis borrowed $1,000 from Ayana for a year and agreed to repay her $1,050 at the end of the year. If the inflation rate was 3 percent, what is the real rate of interest Ayana received?

The vertical long-run aggregate supply curve reflects the fact that in the long run, an increase in the price level

What are the three reasons why the aggregate demand curve slopes downward? Give an example of each.

If the price level in the current period is higher than what buyers and sellers anticipated,

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Taking the Nations Economic Pulse

Economic Fluctuations, Unemployment, and Inflation

Dynamic Change, Economic Fluctuations, and the Ad--As Model

Fiscal Policy: The Keynesian View and the Historical Development of Macroeconomics

Fiscal Policy: Incentives, and Secondary Effects

Money and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, Output, and Employment

Creating an Environment for Growth and Prosperity

Institutions, Policies, and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Special Topics

Filters