Question 1

A reduction in the general price level with a constant money supply is shown by a

Accepted Answer

A)  leftward shift in the LM curve 
B)  movement down along a given aggregate demand curve 
C)  rightward shift in the aggregate supply curve 
D)  a rightward shift in the IS curve 
A)  leftward shift in the LM curve 
B)  movement down along a given aggregate demand curve 
C)  rightward shift in the aggregate supply curve 
D)  a rightward shift in the IS curve B

Question 2

Stagflation is most likely to be caused by

Accepted Answer

A)  both a leftward shift in aggregate supply and a rightward shift in aggregate demand 
B)  both a rightward shift in aggregate supply and a rightward shift in aggregate demand 
C)  a leftward shift in aggregate supply 
D)  a leftward shift in aggregate demand 
A)  both a leftward shift in aggregate supply and a rightward shift in aggregate demand 
B)  both a rightward shift in aggregate supply and a rightward shift in aggregate demand 
C)  a leftward shift in aggregate supply 
D)  a leftward shift in aggregate demand C

Question 3

Why does the ease of combating a recession with expansionary fiscal or monetary policy depend on how flexible prices are downward?

Accepted Answer

The easier prices fall the easier it is for short-run aggregate supply to increase and for the quantity of aggregate demand to increase until output is restored.

Question 4

How does an increase in government expenditure impact aggregate demand?

Accepted Answer

An increase in government expenditure wi

Question 5

Which of the following statements is false with regard to the effect of macroeconomic policies?

Accepted Answer

A)  they generally cause shifts in the aggregate demand curve 
B)  they can possibly increase long-run growth 
C)  they can help correct supply shocks that increases production costs but only at the expense of even higher inflation 
D)  they always cause shifts in the long-run aggregate supply curve 
A)  they generally cause shifts in the aggregate demand curve 
B)  they can possibly increase long-run growth 
C)  they can help correct supply shocks that increases production costs but only at the expense of even higher inflation 
D)  they always cause shifts in the long-run aggregate supply curve

Question 6

An autonomous short-term capital outflow under flexible exchange rates causes the nation's aggregate demand curve to

Accepted Answer

A)  shift to the right 
B)  shift to the left 
C)  remain unchanged 
D)  any of the above 
A)  shift to the right 
B)  shift to the left 
C)  remain unchanged 
D)  any of the above

Question 7

The long run aggregate supply curve is

Accepted Answer

A)  independent of prices and is vertical at the nation's natural rate of output 
B)  dependent on prices and is vertical at the nation's natural rate of output 
C)  independent of prices and is horizontal at the nation's natural rate of output 
D)  dependent on prices and is horizontal at the nation's natural rate of output 
A)  independent of prices and is vertical at the nation's natural rate of output 
B)  dependent on prices and is vertical at the nation's natural rate of output 
C)  independent of prices and is horizontal at the nation's natural rate of output 
D)  dependent on prices and is horizontal at the nation's natural rate of output

Question 8

In general,as the economy expands or contracts over the business cycle

Accepted Answer

A)  prices change rapidly 
B)  prices remain unchanged except in a recession 
C)  prices remain unchanged until the economy reaches full employment 
D)  prices change, but slowly 
A)  prices change rapidly 
B)  prices remain unchanged except in a recession 
C)  prices remain unchanged until the economy reaches full employment 
D)  prices change, but slowly

Question 9

Which of the following statements is false?

Accepted Answer

A)  a nations' natural level of output can increase as a result of growth 
B)  imperfection in product markets can lead to temporary deviations in a nation's output from its long-run natural level 
C)  sticky wages cannot lead to temporary deviations in a nation's output from its long-run natural level 
D)  none of the above 
A)  a nations' natural level of output can increase as a result of growth 
B)  imperfection in product markets can lead to temporary deviations in a nation's output from its long-run natural level 
C)  sticky wages cannot lead to temporary deviations in a nation's output from its long-run natural level 
D)  none of the above

Question 10

An increase in government expenditures leads to

Accepted Answer

A)  a rightward shift in the IS curve 
B)  a rightward shift in the AD curve 
C)  an increase in the level of national income 
D)  all of the above 
A)  a rightward shift in the IS curve 
B)  a rightward shift in the AD curve 
C)  an increase in the level of national income 
D)  all of the above

Question 11

An increase in the money supply with constant prices leads to a

Accepted Answer

A)  leftward shift in the LM curve 
B)  movement along a given aggregate demand curve 
C)  rightward shift in the aggregate demand curve 
D)  rightward shift in the IS curve 
A)  leftward shift in the LM curve 
B)  movement along a given aggregate demand curve 
C)  rightward shift in the aggregate demand curve 
D)  rightward shift in the IS curve

Question 12

Why is monetary policy ineffective under a fixed exchange rate system?

Accepted Answer

The long-run exchange rate is essentiall

Question 13

What conditions lead to the stagflation of the 1970s?

Accepted Answer

Stagflation in the 1970s was c

Question 14

The correlation between the degree of central bank independence and average rate of inflation tends to be

Accepted Answer

A)  negative 
B)  positive 
C)  there is no correlation 
D)  none of the above 
A)  negative 
B)  positive 
C)  there is no correlation 
D)  none of the above

Question 15

The aggregate demand curve for an open economy under fixed exchange rates is

Accepted Answer

A)  less elastic than if the economy were closed 
B)  more elastic than in the economy were closed 
C)  more elastic than in the economy operated with flexible exchange rates 
D)  all of the above 
A)  less elastic than if the economy were closed 
B)  more elastic than in the economy were closed 
C)  more elastic than in the economy operated with flexible exchange rates 
D)  all of the above

Question 16

An autonomous short term capital inflow or reduced capital outflow results in a a rightward shift in aggregate demand under flexible exchange rates and

Accepted Answer

A)  leftward shift under fixed exchange rates 
B)  rightward shift in aggregate demand under flexible exchange rates and no shift under fixed exchange rates 
C)  leftward shift in aggregate demand under flexible exchange rates and a rightward shift under fixed exchange rates 
D)  leftward shift in aggregate demand under flexible exchange rates and a no shift under fixed exchange rates 
A)  leftward shift under fixed exchange rates 
B)  rightward shift in aggregate demand under flexible exchange rates and no shift under fixed exchange rates 
C)  leftward shift in aggregate demand under flexible exchange rates and a rightward shift under fixed exchange rates 
D)  leftward shift in aggregate demand under flexible exchange rates and a no shift under fixed exchange rates

Question 17

Suppose that the economy is in long-run equilibrium,and interest rates in the rest of the world rise.Explain the short-run effects on the US economy under fixed and flexible exchange rates.

Accepted Answer

Under fixed exchange rates,there will be

Question 18

Inflation targeting refers to:

Accepted Answer

A)  central banks targeting a precise number for the inflation rate. 
B)  central banks targeting a range for the inflation rate. 
C)  fiscal policies that target a precise number for the inflation rate. 
D)  fiscal policies that target a range for the inflation rate. 
A)  central banks targeting a precise number for the inflation rate. 
B)  central banks targeting a range for the inflation rate. 
C)  fiscal policies that target a precise number for the inflation rate. 
D)  fiscal policies that target a range for the inflation rate.

Question 19

The aggregate demand curve (AD)for closed economy is derived from the

Accepted Answer

A)  IS curve 
B)  LM curve 
C)  FE curve 
D)  IS and LM curves 
A)  IS curve 
B)  LM curve 
C)  FE curve 
D)  IS and LM curves

Question 20

Empirical evidence suggests which of the following about central bank independence and inflation rates?

Accepted Answer

A)  More independent central banks are associated with lower rates of inflation. 
B)  More independent central banks are associated with constant rates of inflation. 
C)  More independent central banks are associated with higher rates of inflation. 
D)  There is no observable relationship between inflation rates and central bank independence. 
A)  More independent central banks are associated with lower rates of inflation. 
B)  More independent central banks are associated with constant rates of inflation. 
C)  More independent central banks are associated with higher rates of inflation. 
D)  There is no observable relationship between inflation rates and central bank independence.

Exam 19: Prices and Output in an Open Economy: Aggregate Demand and Aggregate Supply

A reduction in the general price level with a constant money supply is shown by a

Stagflation is most likely to be caused by

Why does the ease of combating a recession with expansionary fiscal or monetary policy depend on how flexible prices are downward?

How does an increase in government expenditure impact aggregate demand?

Which of the following statements is false with regard to the effect of macroeconomic policies?

An autonomous short-term capital outflow under flexible exchange rates causes the nation's aggregate demand curve to

The long run aggregate supply curve is

In general,as the economy expands or contracts over the business cycle

Which of the following statements is false?

An increase in government expenditures leads to

An increase in the money supply with constant prices leads to a

Why is monetary policy ineffective under a fixed exchange rate system?

What conditions lead to the stagflation of the 1970s?

The correlation between the degree of central bank independence and average rate of inflation tends to be

The aggregate demand curve for an open economy under fixed exchange rates is

An autonomous short term capital inflow or reduced capital outflow results in a a rightward shift in aggregate demand under flexible exchange rates and

Suppose that the economy is in long-run equilibrium,and interest rates in the rest of the world rise.Explain the short-run effects on the US economy under fixed and flexible exchange rates.

Inflation targeting refers to:

The aggregate demand curve (AD)for closed economy is derived from the

Empirical evidence suggests which of the following about central bank independence and inflation rates?

Introduction

The Law of Comparative Advantage

The Standard Theory of International Trade

Demand and Supply, offer Curves, and the Terms of Trade

Factor Endowments and the Heckscherohlin Theory

Economies of Scale, imperfect Competition, and International Trade

Economic Growth and International Trade

Trade Restrictions: Tariffs

Nontariff Trade Barriers and the New Protectionism

Economic Integration: Customs Unions and Free Trade Areas

International Trade and Economic Development

International Resource Movements and Multinational Corporations

Balance of Payments

Foreign Exchange Markets and Exchange Rates

Exchange Rate Determination

The Price Adjustment Mechanism With Flexible and Fixed Exchange Rates

The Income Adjustment Mechanism and Synthesis of Automatic Adjustments

Open Economy Macroeconomics: Adjustment Policies

Flexible Versus Fixed Exchange Rates, the European Monetary System, and Macroeconomic Policy Coordination

The International Monetary System: Past, present, and Future Answers to Selected Problems on Web

Filters