Question 1

If the interest rate rises,the

Accepted Answer

A)  quantity of loanable funds demanded by firms decreases 
B)  quantity of loanable funds demanded by government decreases 
C)  quantity of loanable funds demanded by firms increases 
D)  quantity of loanable funds demanded by government increases 
E)  demand for loanable funds curve shifts to the right 
A)  quantity of loanable funds demanded by firms decreases 
B)  quantity of loanable funds demanded by government decreases 
C)  quantity of loanable funds demanded by firms increases 
D)  quantity of loanable funds demanded by government increases 
E)  demand for loanable funds curve shifts to the right A

Question 2

In the classical model,fiscal policy has no demand-side effects on output or employment..

Accepted Answer

A) True 
 B)False  True

Question 3

The relationship between household saving and business investment spending in equilibrium is:
Planned investment = household saving - government spending + taxes

Accepted Answer

A) True 
 B)False  True

Question 4

In the classical model,the quantity of loanable funds supplied is

Accepted Answer

A)  positively related to the level of income 
B)  negatively related to the price level 
C)  positively related to the price level 
D)  negatively related to the interest rate 
E)  positively related to the interest rate 
A)  positively related to the level of income 
B)  negatively related to the price level 
C)  positively related to the price level 
D)  negatively related to the interest rate 
E)  positively related to the interest rate

Question 5

If the labor supply and demand curves cross at a wage of $20,

Accepted Answer

A)  a wage rate of $10 per hour would lead to an excess demand for labor 
B)  a wage rate of $10 per hour would lead to an excess supply of labor 
C)  that wage causes a high rate of cyclical unemployment 
D)  employees are overpaid 
E)  a wage rate of $10 per hour would mean there is a significant amount of structural unemployment 
A)  a wage rate of $10 per hour would lead to an excess demand for labor 
B)  a wage rate of $10 per hour would lead to an excess supply of labor 
C)  that wage causes a high rate of cyclical unemployment 
D)  employees are overpaid 
E)  a wage rate of $10 per hour would mean there is a significant amount of structural unemployment

Question 6

In the classical model,investment spending is

Accepted Answer

A)  positively related to the level of income 
B)  positively related to the interest rate 
C)  negatively related to the interest rate 
D)  unrelated to the interest rate 
E)  negatively related to the price level 
A)  positively related to the level of income 
B)  positively related to the interest rate 
C)  negatively related to the interest rate 
D)  unrelated to the interest rate 
E)  negatively related to the price level

Question 7

Saving and taxes are considered leakages from the spending stream.

Accepted Answer

A) True 
 B)False

Question 8

Net taxes are

Accepted Answer

A)  the total amount of taxes paid to the government 
B)  total tax revenues of the federal government 
C)  total tax revenues plus transfer payments 
D)  total tax revenues minus transfer payments 
E)  total tax revenues minus taxes paid by firms 
A)  the total amount of taxes paid to the government 
B)  total tax revenues of the federal government 
C)  total tax revenues plus transfer payments 
D)  total tax revenues minus transfer payments 
E)  total tax revenues minus taxes paid by firms

Question 9

The short-run macro model

Accepted Answer

A)  is an attempt to explain why the economy tends to perform better in the short run than in the long run 
B)  was developed during the Great Depression to explain the economy's continuing poor performance 
C)  lost its popularity during the 1950s 
D)  was developed during the early 19th century 
E)  explains the forces that work to drive the economy to full employment 
A)  is an attempt to explain why the economy tends to perform better in the short run than in the long run 
B)  was developed during the Great Depression to explain the economy's continuing poor performance 
C)  lost its popularity during the 1950s 
D)  was developed during the early 19th century 
E)  explains the forces that work to drive the economy to full employment

Question 10

The classical model

Accepted Answer

A)  relies on the equivalency of the labor,capital,and land resource markets 
B)  includes a land market and a labor market 
C)  focuses primarily on capital markets 
D)  focuses primarily on labor markets 
E)  focuses on labor,capital,and land markets 
A)  relies on the equivalency of the labor,capital,and land resource markets 
B)  includes a land market and a labor market 
C)  focuses primarily on capital markets 
D)  focuses primarily on labor markets 
E)  focuses on labor,capital,and land markets

Question 11

Using the following information on a hypothetical economy in equilibrium,calculate total output for 2008.
$\begin{array}{l|r}
\text { Consumption Spending } & \$ 3.5 \text { trillion } \
\hline \text { Net Taxes } & \$ 2.7 \text { trillion } \
\hline \text { Household Saving } & \$ 2.5 \text { trillion } \
\hline \text { Investment Spending } & \$ 2.2 \text { trillion } \
\hline \text { Government Purchases } & \$ 3.0 \text { trillion } \
\hline \text { Net Exports } & -\$ 0.3 \text { trillion }
\end{array}$

If exports are exactly equal to imports,total output for 2008 is

Accepted Answer

A)  $5.2 trillion 
B)  $5.7 trillion 
C)  $8.4 trillion 
D)  $8.7 trillion 
E)  $13.9 trillion 
A)  $5.2 trillion 
B)  $5.7 trillion 
C)  $8.4 trillion 
D)  $8.7 trillion 
E)  $13.9 trillion

Question 12

On a graph,the private sector's demand for loanable funds curve is

Accepted Answer

A)  upward sloping 
B)  vertical 
C)  horizontal 
D)  downward sloping 
E)  horizontal then upward sloping 
A)  upward sloping 
B)  vertical 
C)  horizontal 
D)  downward sloping 
E)  horizontal then upward sloping

Question 13

Which of the following are examples of injections?

Accepted Answer

A)  government purchases,net taxes and exports 
B)  government purchases,investment spending and exports 
C)  net taxes,imports and household saving 
D)  household saving,imports and government purchases 
E)  exports,imports and household saving 
A)  government purchases,net taxes and exports 
B)  government purchases,investment spending and exports 
C)  net taxes,imports and household saving 
D)  household saving,imports and government purchases 
E)  exports,imports and household saving

Question 14

If the actual real wage exceeds the equilibrium wage,there will be an excess supply of labor.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is a leakage in an open economy?

Accepted Answer

A)  Planned investment 
B)  Imports 
C)  Exports 
D)  Government purchases 
E)  Money 
A)  Planned investment 
B)  Imports 
C)  Exports 
D)  Government purchases 
E)  Money

Question 16

If at an interest rate of 7 percent,planned investment is $2 trillion,government spending is $3 trillion,net taxes are $2.8 trillion,and household saving is $2.2 trillion,what is the quantity of funds demanded at an interest rate of 7 percent?

Accepted Answer

A)  $1.8 trillion 
B)  $2.2 trillion 
C)  $2.8 trillion 
D)  $5.0 trillion 
E)  $5.8 trillion 
A)  $1.8 trillion 
B)  $2.2 trillion 
C)  $2.8 trillion 
D)  $5.0 trillion 
E)  $5.8 trillion

Question 17

In the classical model with an open economy,an increase in the trade deficit as a result of a tax cut,causes a decline in the interest rate,attracting more loanable funds from abroad.

Accepted Answer

A) True 
 B)False

Question 18

-Refer to Figure 8-4.Based on these graphs,what are the equilibrium interest rate and quantity of loanable funds exchanged?

Accepted Answer

A)  5 percent and $1.4 trillion 
B)  5 percent and $2.2 trillion 
C)  8 percent and $1.8 trillion 
D)  8 percent and $2.8 trillion 
E)  It cannot be determined with the information given. 
A)  5 percent and $1.4 trillion 
B)  5 percent and $2.2 trillion 
C)  8 percent and $1.8 trillion 
D)  8 percent and $2.8 trillion 
E)  It cannot be determined with the information given.

Question 19

The aggregate production function shows us that increasing the number of workers employed will increase output at a constant rate.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following markets must clear if injections from the income-spending stream are to equal leakages from the stream?

Accepted Answer

A)  The resource market 
B)  The labor market 
C)  The goods market 
D)  The aggregate market 
E)  The loanable funds market 
A)  The resource market 
B)  The labor market 
C)  The goods market 
D)  The aggregate market 
E)  The loanable funds market

If the interest rate rises,the

In the classical model,fiscal policy has no demand-side effects on output or employment..

The relationship between household saving and business investment spending in equilibrium is: Planned investment = household saving - government spending + taxes

In the classical model,the quantity of loanable funds supplied is

If the labor supply and demand curves cross at a wage of $20,

In the classical model,investment spending is

Saving and taxes are considered leakages from the spending stream.

Net taxes are

The short-run macro model

The classical model

On a graph,the private sector's demand for loanable funds curve is

Which of the following are examples of injections?

If the actual real wage exceeds the equilibrium wage,there will be an excess supply of labor.

Which of the following is a leakage in an open economy?

If at an interest rate of 7 percent,planned investment is $2 trillion,government spending is $3 trillion,net taxes are $2.8 trillion,and household saving is $2.2 trillion,what is the quantity of funds demanded at an interest rate of 7 percent?

In the classical model with an open economy,an increase in the trade deficit as a result of a tax cut,causes a decline in the interest rate,attracting more loanable funds from abroad.

-Refer to Figure 8-4.Based on these graphs,what are the equilibrium interest rate and quantity of loanable funds exchanged?

The aggregate production function shows us that increasing the number of workers employed will increase output at a constant rate.

Which of the following markets must clear if injections from the income-spending stream are to equal leakages from the stream?

What is Economics?

Scarcity, Choice, and Economic Systems

Supply and Demand

Working With Supply and Demand

What Macroeconomics Tries to Explain

Production, Income, and Employment

The Price Level and Inflation

Economic Growth and Rising Living Standards

Economic Fluctuations

The Short-run Macro Model

Fiscal Policy

Money, Banks, and the Federal Reserve

The Money Market and Monetary Policy

Aggregate Demand and Aggregate Supply

Inflation and Monetary Policy

Exchange Rates and Macroeconomic Policy

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Exam 8:The Classical Long run Model

If the interest rate rises,the

In the classical model,fiscal policy has no demand-side effects on output or employment..

The relationship between household saving and business investment spending in equilibrium is: Planned investment = household saving - government spending + taxes

In the classical model,the quantity of loanable funds supplied is

If the labor supply and demand curves cross at a wage of $20,

In the classical model,investment spending is

Saving and taxes are considered leakages from the spending stream.

Net taxes are

The short-run macro model

The classical model

On a graph,the private sector's demand for loanable funds curve is

Which of the following are examples of injections?

If the actual real wage exceeds the equilibrium wage,there will be an excess supply of labor.

Which of the following is a leakage in an open economy?

If at an interest rate of 7 percent,planned investment is $2 trillion,government spending is $3 trillion,net taxes are $2.8 trillion,and household saving is $2.2 trillion,what is the quantity of funds demanded at an interest rate of 7 percent?

In the classical model with an open economy,an increase in the trade deficit as a result of a tax cut,causes a decline in the interest rate,attracting more loanable funds from abroad.

-Refer to Figure 8-4.Based on these graphs,what are the equilibrium interest rate and quantity of loanable funds exchanged?

The aggregate production function shows us that increasing the number of workers employed will increase output at a constant rate.

Which of the following markets must clear if injections from the income-spending stream are to equal leakages from the stream?

What is Economics?

Scarcity, Choice, and Economic Systems

Supply and Demand

Working With Supply and Demand

What Macroeconomics Tries to Explain

Production, Income, and Employment

The Price Level and Inflation

Economic Growth and Rising Living Standards

Economic Fluctuations

The Short-run Macro Model

Fiscal Policy

Money, Banks, and the Federal Reserve

The Money Market and Monetary Policy

Aggregate Demand and Aggregate Supply

Inflation and Monetary Policy

Exchange Rates and Macroeconomic Policy

Filters