Question 1

Classical economics argued that:

Accepted Answer

A) the supply curve should remain vertical in the long run. 
B) the First World War was fought to free Britain from economic ruin. 
C) depression was only a short-run, temporary departure from full-employment equilibrium. 
D) funeral plots need to be determined by the market. 
E) market-based realities cause estate taxes to be too high. 
A) the supply curve should remain vertical in the long run. 
B) the First World War was fought to free Britain from economic ruin. 
C) depression was only a short-run, temporary departure from full-employment equilibrium. 
D) funeral plots need to be determined by the market. 
E) market-based realities cause estate taxes to be too high.

Question 2

The classical economists believe that prices and wages quickly adjust to keep the economy operating at full employment.

Accepted Answer

A) True 
 B)False

Question 3

The horizontal segment of the aggregate supply curve:

Accepted Answer

A) shows that real GDP can increase only by affecting the economy's price level. 
B) shows that real GDP can increase without affecting the economy's price level. 
C) depicts a positive relationship between real GDP and the price level. 
D) depicts a negative relationship between real GDP and the price level. 
E) marks the full-employment level of real GDP. 
A) shows that real GDP can increase only by affecting the economy's price level. 
B) shows that real GDP can increase without affecting the economy's price level. 
C) depicts a positive relationship between real GDP and the price level. 
D) depicts a negative relationship between real GDP and the price level. 
E) marks the full-employment level of real GDP.

Question 4

When the economy is operating well below capacity,an increase in spending tends to be reflected primarily in a/an:

Accepted Answer

A) lower level of employment. 
B) increase in price. 
C) lower level of output. 
D) higher level of output and employment. 
E) increase in business failures. 
A) lower level of employment. 
B) increase in price. 
C) lower level of output. 
D) higher level of output and employment. 
E) increase in business failures.

Question 5

According to the net-exports effect,as the price level falls relative to the rest of the world:

Accepted Answer

A) foreigners buy fewer goods. 
B) foreigners buy more Australian goods. 
C) the aggregate demand curve shifts to the left. 
D) the aggregate demand curve shifts to the right. 
E) the supply of Australian-made goods increases. 
A) foreigners buy fewer goods. 
B) foreigners buy more Australian goods. 
C) the aggregate demand curve shifts to the left. 
D) the aggregate demand curve shifts to the right. 
E) the supply of Australian-made goods increases.

Question 6

When OPEC caused the price of oil to rise in the early 1970s,the:

Accepted Answer

A) aggregate supply curve shifted to the right. 
B) aggregate supply curve shifted to the left. 
C) aggregate demand curve shifted to the right. 
D) aggregate demand curve shifted to the left. 
E) price level in the economy fell. 
A) aggregate supply curve shifted to the right. 
B) aggregate supply curve shifted to the left. 
C) aggregate demand curve shifted to the right. 
D) aggregate demand curve shifted to the left. 
E) price level in the economy fell.

Question 7

If the terms of trade increase then,ceteris paribus:

Accepted Answer

A) imports will fall. 
B) imports will rise. 
C) exports will rise. 
D) exports will fall. 
A) imports will fall. 
B) imports will rise. 
C) exports will rise. 
D) exports will fall.

Question 8

The idea that government spending can be used to influence demand in an economy was first put forward by:

Accepted Answer

A) Adam Smith. 
B) John Howard. 
C) Peter Costello. 
D) John Maynard Keynes. 
E) David Ricardo. 
A) Adam Smith. 
B) John Howard. 
C) Peter Costello. 
D) John Maynard Keynes. 
E) David Ricardo.

Question 9

When the aggregate demand curve shifts to the right,intersecting the aggregate supply curve on its upward-sloping or vertical segment:

Accepted Answer

A) demand-pull inflation occurs. 
B) cost-push inflation occurs. 
C) stagflation occurs. 
D) deflation occurs. 
E) the shift pulls the price level down. 
A) demand-pull inflation occurs. 
B) cost-push inflation occurs. 
C) stagflation occurs. 
D) deflation occurs. 
E) the shift pulls the price level down.

Question 10

As your income increases over time,your MPC:

Accepted Answer

A) will not remain constant. 
B) will decrease. 
C) will increase. 
D) can remain constant or can change. 
A) will not remain constant. 
B) will decrease. 
C) will increase. 
D) can remain constant or can change.

Question 11

Along the intermediate range of the aggregate supply curve the price level and the level of GDP changes as an economy approaches full employment.

Accepted Answer

A) True 
 B)False

Question 12

The aggregate demand curve is downward sloping because:

Accepted Answer

A) an increase in the price level will cause an increase in spending. 
B) at lower price levels, real wealth decreases, causing a decrease in the quantities of goods and services demanded. 
C) at lower price levels, interest rates decrease, causing a decrease in the quantities of goods and services demanded. 
D) at lower price levels, exports increase, causing an increase in the quantities of goods and services demanded. 
E) increases in the price level do not affect people's real wealth. 
A) an increase in the price level will cause an increase in spending. 
B) at lower price levels, real wealth decreases, causing a decrease in the quantities of goods and services demanded. 
C) at lower price levels, interest rates decrease, causing a decrease in the quantities of goods and services demanded. 
D) at lower price levels, exports increase, causing an increase in the quantities of goods and services demanded. 
E) increases in the price level do not affect people's real wealth.

Question 13

Stagflation occurs when an economy experiences the high unemployment and low prices simultaneously.

Accepted Answer

A) True 
 B)False

Question 14

Stagflation occurs when the economy experiences:

Accepted Answer

A) low unemployment and low inflation. 
B) high unemployment and rapid inflation. 
C) low unemployment and rapid inflation. 
D) high unemployment and low inflation. 
A) low unemployment and low inflation. 
B) high unemployment and rapid inflation. 
C) low unemployment and rapid inflation. 
D) high unemployment and low inflation.

Classical economics argued that:

The classical economists believe that prices and wages quickly adjust to keep the economy operating at full employment.

The horizontal segment of the aggregate supply curve:

When the economy is operating well below capacity,an increase in spending tends to be reflected primarily in a/an:

According to the net-exports effect,as the price level falls relative to the rest of the world:

When OPEC caused the price of oil to rise in the early 1970s,the:

If the terms of trade increase then,ceteris paribus:

The idea that government spending can be used to influence demand in an economy was first put forward by:

When the aggregate demand curve shifts to the right,intersecting the aggregate supply curve on its upward-sloping or vertical segment:

As your income increases over time,your MPC:

Along the intermediate range of the aggregate supply curve the price level and the level of GDP changes as an economy approaches full employment.

The aggregate demand curve is downward sloping because:

Stagflation occurs when an economy experiences the high unemployment and low prices simultaneously.

Stagflation occurs when the economy experiences:

Thinking like an economist

Production possibilities and opportunity cost

Market demand and supply

Markets in action

Elasticity of demand and supply

Production costs

Perfect competition

Monopoly

Monopolistic competition and oligopoly

Policy issues: resource taxes and climate change

Measuring the size of the economy

Business cycles and economic growth

Inflation and unemployment

The monetary and financial system

Macroeconomic policy I: monetary policy

Macroeconomic policy II: fiscal policy

International trade and finance

Applying graphs to economics

Filters

Exam 14: A simple model of the macro economy

Classical economics argued that:

The classical economists believe that prices and wages quickly adjust to keep the economy operating at full employment.

The horizontal segment of the aggregate supply curve:

When the economy is operating well below capacity,an increase in spending tends to be reflected primarily in a/an:

According to the net-exports effect,as the price level falls relative to the rest of the world:

When OPEC caused the price of oil to rise in the early 1970s,the:

If the terms of trade increase then,ceteris paribus:

The idea that government spending can be used to influence demand in an economy was first put forward by:

When the aggregate demand curve shifts to the right,intersecting the aggregate supply curve on its upward-sloping or vertical segment:

As your income increases over time,your MPC:

Along the intermediate range of the aggregate supply curve the price level and the level of GDP changes as an economy approaches full employment.

The aggregate demand curve is downward sloping because:

Stagflation occurs when an economy experiences the high unemployment and low prices simultaneously.

Stagflation occurs when the economy experiences:

Thinking like an economist

Production possibilities and opportunity cost

Market demand and supply

Markets in action

Elasticity of demand and supply

Production costs

Perfect competition

Monopoly

Monopolistic competition and oligopoly

Policy issues: resource taxes and climate change

Measuring the size of the economy

Business cycles and economic growth

Inflation and unemployment

The monetary and financial system

Macroeconomic policy I: monetary policy

Macroeconomic policy II: fiscal policy

International trade and finance

Applying graphs to economics

Filters