Question 1

Within the framework of the AD/AS model,if a long-run equilibrium is present in the goods and services market,

Accepted Answer

A) decision makers will have accurately forecast the current price level when they arrived at resource price and loanable funds agreements. 
B) the profit rates of the firms will generally exceed the competitive level. 
C) the actual rate of unemployment will be less than the natural rate of unemployment. 
D) output will exceed the economy's long-run sustainable output. 
A) decision makers will have accurately forecast the current price level when they arrived at resource price and loanable funds agreements. 
B) the profit rates of the firms will generally exceed the competitive level. 
C) the actual rate of unemployment will be less than the natural rate of unemployment. 
D) output will exceed the economy's long-run sustainable output.

Question 2

Which of the following is the most accurate statement about nominal and real interest rates?

Accepted Answer

A) Nominal and real interest rates always move together. 
B) Nominal and real interest rates never move together. 
C) Nominal and real interest rates often do not move together. 
D) Nominal and real interest rates always move in opposite directions. 
A) Nominal and real interest rates always move together. 
B) Nominal and real interest rates never move together. 
C) Nominal and real interest rates often do not move together. 
D) Nominal and real interest rates always move in opposite directions.

Question 3

When the actual rate of unemployment is less than the natural rate of unemployment,the economy

Accepted Answer

A) operates at an output greater than its long-run potential. 
B) operates at its maximum sustainable output. 
C) must also be experiencing stable prices (zero inflation). 
D) operates at an output less than its long-run potential. 
A) operates at an output greater than its long-run potential. 
B) operates at its maximum sustainable output. 
C) must also be experiencing stable prices (zero inflation). 
D) operates at an output less than its long-run potential.

Question 4

Within the framework of the AD/AS model,when the current price level in the goods and services market is above the level anticipated at the time decision makers agreed to long-term resource contracts,

Accepted Answer

A) producer profits will fall,leading to a reduction in output. 
B) the natural rate of unemployment will rise. 
C) the actual rate of unemployment will fall below the natural rate of unemployment. 
D) output will be temporarily below the economy's long-run sustainable output. 
A) producer profits will fall,leading to a reduction in output. 
B) the natural rate of unemployment will rise. 
C) the actual rate of unemployment will fall below the natural rate of unemployment. 
D) output will be temporarily below the economy's long-run sustainable output.

Question 5

The use of government taxation and expenditures to achieve macroeconomic goals is called

Accepted Answer

A) cyclical policy. 
B) monetary policy. 
C) fiscal policy. 
D) industrial policy. 
A) cyclical policy. 
B) monetary policy. 
C) fiscal policy. 
D) industrial policy.

Question 6

If the value of a nation's imports exceeds exports,the nation has a

Accepted Answer

A) government budget deficit. 
B) trade surplus. 
C) trade deficit. 
D) negative net capital flow. 
A) government budget deficit. 
B) trade surplus. 
C) trade deficit. 
D) negative net capital flow.

Question 7

Which of the following would generate a supply of euros in exchange for dollars?

Accepted Answer

A) American demand for European real estate. 
B) European demand for U.S.government bonds. 
C) Americans vacationing in Europe. 
D) Purchase of French wines by U.S.importers. 
A) American demand for European real estate. 
B) European demand for U.S.government bonds. 
C) Americans vacationing in Europe. 
D) Purchase of French wines by U.S.importers.

Question 8

In the aggregate demand and aggregate supply model,

Accepted Answer

A) the factors that cause the individual demand curve to slope downward are the same as the factors that cause the aggregate demand curve to slope downward. 
B) the factors that cause the individual supply curve to slope upward are the same as the factors that cause the short-run aggregate supply curve to slope upward. 
C) the upward-sloping aggregate demand curve intersects the downward-sloping short-run aggregate supply curve to determine the economy's price level and GDP. 
D) the upward-sloping short-run aggregate supply curve intersects the downward-sloping aggregate demand curve to determine the economy's price level and GDP. 
A) the factors that cause the individual demand curve to slope downward are the same as the factors that cause the aggregate demand curve to slope downward. 
B) the factors that cause the individual supply curve to slope upward are the same as the factors that cause the short-run aggregate supply curve to slope upward. 
C) the upward-sloping aggregate demand curve intersects the downward-sloping short-run aggregate supply curve to determine the economy's price level and GDP. 
D) the upward-sloping short-run aggregate supply curve intersects the downward-sloping aggregate demand curve to determine the economy's price level and GDP.

Question 9

If the dollar price of the English pound goes from $1.50 to $2.00,the dollar has

Accepted Answer

A) appreciated,and the English will find U.S.goods cheaper. 
B) appreciated,and the English will find U.S.goods more expensive. 
C) depreciated,and the English will find U.S.goods cheaper. 
D) depreciated,and the English will find U.S.goods more expensive. 
A) appreciated,and the English will find U.S.goods cheaper. 
B) appreciated,and the English will find U.S.goods more expensive. 
C) depreciated,and the English will find U.S.goods cheaper. 
D) depreciated,and the English will find U.S.goods more expensive.

Question 10

The real interest rate is

Accepted Answer

A) the premium that borrowers must pay in order to acquire more purchasing power. 
B) the reward lenders receive in exchange for their willingness to delay consumption into the future. 
C) equal to the money interest rate minus the inflationary premium. 
D) all of the above. 
A) the premium that borrowers must pay in order to acquire more purchasing power. 
B) the reward lenders receive in exchange for their willingness to delay consumption into the future. 
C) equal to the money interest rate minus the inflationary premium. 
D) all of the above.

Question 11

Fiscal policy is

Accepted Answer

A) the deliberate control of the money supply to achieve macroeconomic goals. 
B) the use of the government's regulatory powers to improve economic efficiency. 
C) the operation of business enterprises by the government. 
D) the use of government taxation and expenditures to achieve macroeconomic goals. 
A) the deliberate control of the money supply to achieve macroeconomic goals. 
B) the use of the government's regulatory powers to improve economic efficiency. 
C) the operation of business enterprises by the government. 
D) the use of government taxation and expenditures to achieve macroeconomic goals.

Question 12

The "loanable funds market" is a term used by economists to describe the

Accepted Answer

A) demand for goods and services by households. 
B) market that includes resources such as labor and capital. 
C) supply of goods and services by firms. 
D) market that coordinates the borrowing and lending of individuals and firms. 
A) demand for goods and services by households. 
B) market that includes resources such as labor and capital. 
C) supply of goods and services by firms. 
D) market that coordinates the borrowing and lending of individuals and firms.

Question 13

As the dollar appreciates,which of the following is most likely to occur?

Accepted Answer

A) More Americans will travel abroad. 
B) American imports will fall. 
C) More foreigners will visit the United States. 
D) American firms will reduce their investments abroad. 
A) More Americans will travel abroad. 
B) American imports will fall. 
C) More foreigners will visit the United States. 
D) American firms will reduce their investments abroad.

Question 14

If a nation's currency depreciates,this will tend to

Accepted Answer

A) shift a nation's balance of trade toward a deficit. 
B) cause a deficit in the government's budget (expenditures - revenues). 
C) make foreign goods more expensive for the nation's citizens. 
D) make foreign goods cheaper for the nation's citizens. 
A) shift a nation's balance of trade toward a deficit. 
B) cause a deficit in the government's budget (expenditures - revenues). 
C) make foreign goods more expensive for the nation's citizens. 
D) make foreign goods cheaper for the nation's citizens.

Question 15

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

Accepted Answer

A) the actual rate of unemployment will be less than the natural rate of unemployment. 
B) the actual rate of unemployment will exceed the natural rate of unemployment. 
C) the natural rate of unemployment will rise. 
D) the natural rate of unemployment will fall. 
A) the actual rate of unemployment will be less than the natural rate of unemployment. 
B) the actual rate of unemployment will exceed the natural rate of unemployment. 
C) the natural rate of unemployment will rise. 
D) the natural rate of unemployment will fall.

Question 16

Under what circumstances will inflation help borrowers at the expense of lenders? Under what circumstances will both parties be unaffected? Which scenario would you expect in the long run?

Accepted Answer

Only when inflation increases more than

Question 17

The portion of after-tax income a consumer does not spend on consumption is called

Accepted Answer

A) investment. 
B) saving. 
C) supply. 
D) temporary income. 
A) investment. 
B) saving. 
C) supply. 
D) temporary income.

Question 18

Which of the following basic economic concepts most clearly provides the foundation for the long-run aggregate supply curve?

Accepted Answer

A) the law of demand 
B) the production possibilities curve 
C) the law of comparative advantage 
D) the law of diminishing marginal utility 
A) the law of demand 
B) the production possibilities curve 
C) the law of comparative advantage 
D) the law of diminishing marginal utility

Question 19

You just bought a $1,000 bond that is scheduled to mature in ten years.If interest rates rise during the next six months,the market value (or price)of your bond will

Accepted Answer

A) increase. 
B) decrease. 
C) remain unchanged. 
D) increase or decrease,depending on the marginal tax bracket you are in. 
A) increase. 
B) decrease. 
C) remain unchanged. 
D) increase or decrease,depending on the marginal tax bracket you are in.

Question 20

The real rate of interest is

Accepted Answer

A) interest paid by commercial banks. 
B) interest paid by the Fed. 
C) equal to the money rate of interest plus the inflationary premium. 
D) the money rate of interest adjusted for inflation. 
A) interest paid by commercial banks. 
B) interest paid by the Fed. 
C) equal to the money rate of interest plus the inflationary premium. 
D) the money rate of interest adjusted for inflation.

Exam 9: Aan Introduction to Basic Macroeconomic Markets

Within the framework of the AD/AS model,if a long-run equilibrium is present in the goods and services market,

Which of the following is the most accurate statement about nominal and real interest rates?

When the actual rate of unemployment is less than the natural rate of unemployment,the economy

Within the framework of the AD/AS model,when the current price level in the goods and services market is above the level anticipated at the time decision makers agreed to long-term resource contracts,

The use of government taxation and expenditures to achieve macroeconomic goals is called

If the value of a nation's imports exceeds exports,the nation has a

Which of the following would generate a supply of euros in exchange for dollars?

In the aggregate demand and aggregate supply model,

If the dollar price of the English pound goes from $1.50 to $2.00,the dollar has

The real interest rate is

Fiscal policy is

The "loanable funds market" is a term used by economists to describe the

As the dollar appreciates,which of the following is most likely to occur?

If a nation's currency depreciates,this will tend to

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

Under what circumstances will inflation help borrowers at the expense of lenders? Under what circumstances will both parties be unaffected? Which scenario would you expect in the long run?

The portion of after-tax income a consumer does not spend on consumption is called

Which of the following basic economic concepts most clearly provides the foundation for the long-run aggregate supply curve?

You just bought a $1,000 bond that is scheduled to mature in ten years.If interest rates rise during the next six months,the market value (or price)of your bond will

The real rate of interest is

The Economic Approach

Asome Tools of the Economist

Asupply,demand,and the Market Process

Asupply and Demand: Applications and Extensions

Difficult Cases for the Market and the Role of Government

The Economics of Collective Decision-Making

Ataking the Nations Economic Pulse

Economic Fluctuations, unemployment, and Inflation

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

Fiscal Policy: the Keynesian View and Historical Perspective

Fiscal Policy, incentives, and Secondary Effects

Amoney 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

Consumer Choice and Elasticity

Acosts and the Supply of Goods

Aprice Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Aprice-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Government Spending and Taxation

The Economics of Social Security

The Stock Market: Its Function, Performance, and Potential As an Investment Opportunity

Great Debates in Economics: Keynes Versus Hayek

The Crisis of 2008: Causes and Lessons for the Future

Lessons From the Great Depression

Lessons From Japan and Canada

The Federal Budget and the National Debt

The Economics of Healthcare

Education: Problems and Performance

Earnings Differences Between Men and Women

Do Labor Unions Increase the Wages of Workers

The Question of Resource Exhaustion

Difficult Environmental Cases and the Role of Government

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