Question 1

A consumer who buys more coffee when the price of coffee falls 5 percent,while all other prices fell 5 percent too,is

Accepted Answer

A) suffering from money illusion. 
B) worrying too much about a coming recession. 
C) behaving in accordance with classical economic theory. 
D) paying too much attention to changes in relative prices. 
A) suffering from money illusion. 
B) worrying too much about a coming recession. 
C) behaving in accordance with classical economic theory. 
D) paying too much attention to changes in relative prices.

Question 2

In economics,investment is defined as

Accepted Answer

A) the spending by businesses on capital goods and inventories. 
B) the spending by households on human capital and durable goods. 
C) disposable income minus consumption. 
D) disposable income plus consumption. 
A) the spending by businesses on capital goods and inventories. 
B) the spending by households on human capital and durable goods. 
C) disposable income minus consumption. 
D) disposable income plus consumption.

Question 3

-Refer to the above figure.Suppose the economy is at E.A stronger dollar leads to a lower real GDP.Which of the aggregate supply curves must be the relevant curve after the change in the value of the dollar?

Accepted Answer

A) 1 
B) 2 
C) 4 
D) 5 
A) 1 
B) 2 
C) 4 
D) 5

Question 4

The classical model uses the assumption that

Accepted Answer

A) all wages and prices are flexible. 
B) monopoly is widespread in the economy. 
C) interest rates are not flexible. 
D) economic markets are fragile and have no tendency to move towards an equilibrium. 
A) all wages and prices are flexible. 
B) monopoly is widespread in the economy. 
C) interest rates are not flexible. 
D) economic markets are fragile and have no tendency to move towards an equilibrium.

Question 5

A permanent reduction in international trade barriers would

Accepted Answer

A) decrease long-run aggregate supply. 
B) increase long-run aggregate supply. 
C) decrease aggregate demand. 
D) increase aggregate demand. 
A) decrease long-run aggregate supply. 
B) increase long-run aggregate supply. 
C) decrease aggregate demand. 
D) increase aggregate demand.

Question 6

Both the long-run and short-run aggregate supply curves will shift when

Accepted Answer

A) the government increases defense spending. 
B) an event occurs which is expected to last only a short period of time. 
C) they are both upward sloping. 
D) the endowments of the factors of production change. 
A) the government increases defense spending. 
B) an event occurs which is expected to last only a short period of time. 
C) they are both upward sloping. 
D) the endowments of the factors of production change.

Question 7

The short-run aggregate supply curve in modern Keynesian analysis is

Accepted Answer

A) horizontal. 
B) vertical. 
C) upward sloping. 
D) downward sloping. 
A) horizontal. 
B) vertical. 
C) upward sloping. 
D) downward sloping.

Question 8

The Keynesian portion of the short-run aggregate supply (SRAS)curve implies

Accepted Answer

A) an upward slope. 
B) no price level changes. 
C) a downward slope. 
D) flexible prices and wages. 
A) an upward slope. 
B) no price level changes. 
C) a downward slope. 
D) flexible prices and wages.

Question 9

According to classical theory,total employment and real Gross Domestic Product (GDP)are

Accepted Answer

A) unrelated. 
B) positively related. 
C) inversely related. 
D) negatively related. 
A) unrelated. 
B) positively related. 
C) inversely related. 
D) negatively related.

Question 10

The Keynesian contention that the short-run aggregate supply curve is horizontal is based on the assumption that there are

Accepted Answer

A) sticky prices. 
B) flexible prices. 
C) real prices. 
D) upward sloping prices. 
A) sticky prices. 
B) flexible prices. 
C) real prices. 
D) upward sloping prices.

Question 11

If the U.S.government were to relax its restrictions on offshore oil well drilling and open drilling in Alaskan national parks,the result to aggregate supply would be to

Accepted Answer

A) cause a shift in the SRAS to the left. 
B) cause a shift in the LRAS to the left. 
C) cause no long-term shifts in AS. 
D) cause a shift in both LRAS and SRAS to the right. 
A) cause a shift in the SRAS to the left. 
B) cause a shift in the LRAS to the left. 
C) cause no long-term shifts in AS. 
D) cause a shift in both LRAS and SRAS to the right.

Question 12

Which of the following is NOT an assumption of the classical model?

Accepted Answer

A) Government intervention is necessary for economic stability. 
B) No one buyer or seller of a good or service can affect the price of the good or service. 
C) People are motivated by self-interest. 
D) People are not fooled by the money illusion. 
A) Government intervention is necessary for economic stability. 
B) No one buyer or seller of a good or service can affect the price of the good or service. 
C) People are motivated by self-interest. 
D) People are not fooled by the money illusion.

Question 13

A stronger dollar leads to cheaper input prices for U.S.firms because

Accepted Answer

A) U.S.workers are willing to work for less pay because of the stronger dollar. 
B) U.S.producers of intermediate goods lower prices in order to benefit from the stronger dollar. 
C) imports of raw materials and intermediate goods are cheaper. 
D) exports of raw materials and intermediate goods are cheaper. 
A) U.S.workers are willing to work for less pay because of the stronger dollar. 
B) U.S.producers of intermediate goods lower prices in order to benefit from the stronger dollar. 
C) imports of raw materials and intermediate goods are cheaper. 
D) exports of raw materials and intermediate goods are cheaper.

Question 14

-The above figure presents the view of the economy according to

Accepted Answer

A) Keynesian economics. 
B) classical economics. 
C) microanalysis. 
D) Ricardian economics. 
A) Keynesian economics. 
B) classical economics. 
C) microanalysis. 
D) Ricardian economics.

Question 15

Money illusion is

Accepted Answer

A) a basic condition that all classical economists assume people have. 
B) when people think they are better off when their income increases even though prices have increased by the same amount. 
C) when people are motivated by self-interest. 
D) could not exist if the economy did not have competitive markets. 
A) a basic condition that all classical economists assume people have. 
B) when people think they are better off when their income increases even though prices have increased by the same amount. 
C) when people are motivated by self-interest. 
D) could not exist if the economy did not have competitive markets.

Question 16

Using a graph,show the effects of a weaker dollar on the economy.Explain.

Accepted Answer

The original equilibrium is E1.A weaker

Question 17

The Keynesian portion of the short-run aggregate supply (SRAS)curve

Accepted Answer

A) is horizontal. 
B) is vertical. 
C) slopes upward. 
D) slopes downward. 
A) is horizontal. 
B) is vertical. 
C) slopes upward. 
D) slopes downward.

Question 18

In the short run,if aggregate demand shifts to the left while the position of the short-run aggregate supply curve does NOT change,then

Accepted Answer

A) the level of economic activity rises. 
B) a recessionary gap occurs. 
C) there is no change in real GDP and the price level. 
D) an inflationary gap occurs. 
A) the level of economic activity rises. 
B) a recessionary gap occurs. 
C) there is no change in real GDP and the price level. 
D) an inflationary gap occurs.

Question 19

Cost-push inflation occurs

Accepted Answer

A) when the aggregate supply curve shifts to the left,while aggregate demand remains stable. 
B) when the aggregate supply curve shifts to the right,while aggregate demand remains stable. 
C) when the aggregate demand curve shifts to the left,while aggregate supply remains stable. 
D) when the aggregate demand curve shifts to the right,while aggregate supply remains stable. 
A) when the aggregate supply curve shifts to the left,while aggregate demand remains stable. 
B) when the aggregate supply curve shifts to the right,while aggregate demand remains stable. 
C) when the aggregate demand curve shifts to the left,while aggregate supply remains stable. 
D) when the aggregate demand curve shifts to the right,while aggregate supply remains stable.

Question 20

The short-run aggregate supply curve is horizontal if

Accepted Answer

A) resources were fully utilized. 
B) there are unutilized resources in the economy. 
C) resources are perfectly adaptable between production processes. 
D) there are high inflation rates. 
A) resources were fully utilized. 
B) there are unutilized resources in the economy. 
C) resources are perfectly adaptable between production processes. 
D) there are high inflation rates.

A consumer who buys more coffee when the price of coffee falls 5 percent,while all other prices fell 5 percent too,is

In economics,investment is defined as

-Refer to the above figure.Suppose the economy is at E.A stronger dollar leads to a lower real GDP.Which of the aggregate supply curves must be the relevant curve after the change in the value of the dollar?

The classical model uses the assumption that

A permanent reduction in international trade barriers would

Both the long-run and short-run aggregate supply curves will shift when

The short-run aggregate supply curve in modern Keynesian analysis is

The Keynesian portion of the short-run aggregate supply (SRAS)curve implies

According to classical theory,total employment and real Gross Domestic Product (GDP)are

The Keynesian contention that the short-run aggregate supply curve is horizontal is based on the assumption that there are

If the U.S.government were to relax its restrictions on offshore oil well drilling and open drilling in Alaskan national parks,the result to aggregate supply would be to

Which of the following is NOT an assumption of the classical model?

A stronger dollar leads to cheaper input prices for U.S.firms because

-The above figure presents the view of the economy according to

Money illusion is

Using a graph,show the effects of a weaker dollar on the economy.Explain.

The Keynesian portion of the short-run aggregate supply (SRAS)curve

In the short run,if aggregate demand shifts to the left while the position of the short-run aggregate supply curve does NOT change,then

Cost-push inflation occurs

The short-run aggregate supply curve is horizontal if

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Consumption, real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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Exam 11: Classical and Keynesian Macro Analyses

A consumer who buys more coffee when the price of coffee falls 5 percent,while all other prices fell 5 percent too,is

In economics,investment is defined as

-Refer to the above figure.Suppose the economy is at E.A stronger dollar leads to a lower real GDP.Which of the aggregate supply curves must be the relevant curve after the change in the value of the dollar?

The classical model uses the assumption that

A permanent reduction in international trade barriers would

Both the long-run and short-run aggregate supply curves will shift when

The short-run aggregate supply curve in modern Keynesian analysis is

The Keynesian portion of the short-run aggregate supply (SRAS)curve implies

According to classical theory,total employment and real Gross Domestic Product (GDP)are

The Keynesian contention that the short-run aggregate supply curve is horizontal is based on the assumption that there are

If the U.S.government were to relax its restrictions on offshore oil well drilling and open drilling in Alaskan national parks,the result to aggregate supply would be to

Which of the following is NOT an assumption of the classical model?

A stronger dollar leads to cheaper input prices for U.S.firms because

-The above figure presents the view of the economy according to

Money illusion is

Using a graph,show the effects of a weaker dollar on the economy.Explain.

The Keynesian portion of the short-run aggregate supply (SRAS)curve

In the short run,if aggregate demand shifts to the left while the position of the short-run aggregate supply curve does NOT change,then

Cost-push inflation occurs

The short-run aggregate supply curve is horizontal if

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Consumption, real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters