Question 1

Suppose that the money stock is $10 billion, each dollar generates $ 5worth of spending, and the NAIRU is 7%. According to the quantity theory of what is nominal GDP (income)

Accepted Answer

A)  $ 350 million
B)  $ 70 million
C)  $ 35 million
D)  $ 50 million D

Question 2

If the aggregate supply curve is perfectly elastic as in the Keynesian model at low level of national incomes, as increase in AD will cause an increase in

Accepted Answer

A)  the rate of inflation
B)  the level of real national output
C)  the government budget deficit
D)  the level of consumer debt B

Question 3

what is the foundation of monetarism?

Accepted Answer

A)  quantity theory of money
B)  demand theory
C)  islm model
D)  none of these A

Question 4

When there are vacancies in the job-market, but also high levels of unemployment, then we could say that this unemployment is?

Accepted Answer

A)  cyclical
B)  regional
C)  seasonal
D)  structural

Question 5

According to monetarists, money supply constitutes

Accepted Answer

A)  currency+ demand deposits
B)  currency +demand deposits+time deposits
C)  currency + demand deposits + equity shares
D)  currency + all kinds of banks + deposits with other institutions + borrowing

Question 6

In the Keynesian range of the SRAS, if AD shift to the right, then

Accepted Answer

A)  the price level falls
B)  the price level rises
C)  real gdp is unchanged
D)  the price level is unchanged

Question 7

Why does a temporary decrease in government purchases decrease labour supply in the classical model?

Accepted Answer

A)  the fall in government spending decreases labour demand, decreasing the real wage, and so people decrease their labour supply.
B)  the decrease in current or future taxes needed to pay for the decrease in government purchases increases people\s wealth.
C)  people prefer to work less when the government is doing less for them.
D)  decreased government purchases make people worse off, so they work less hours.

Question 8

According to the basic classical model, an increase in the money supply will cause

Accepted Answer

A)  employment to increase.
B)  the price level to increase.
C)  output to increase.
D)  investment to increase.

Question 9

The purpose of Keynesian analysis is to explain what to determines the

Accepted Answer

A)  size of the labor force
B)  price level
C)  amount of money required in the economy
D)  levels of national income, output and employment

Question 10

Which of the following is true with respect to the monetary approach to the balance of payments?

Accepted Answer

A)  it views the balance of payments as an essentially monetary phenomenon
B)  a balance of payments deficit results from an excess demand of money in the nation
C)  a balance of payments surplus results from an excess supply of money
D)  balance of payments disequilibrium are not automatically corrected in the long run

Question 11

Attempts to force inflation below no-accelerating inflation rate of unemployment (NAIRU) will cause:

Accepted Answer

A)  inflation accelerate without any change in employment or output
B)  inflation to decelerate with rising employment and output
C)  inflation to decelerate with employment and output remaining the same
D)  inflation to remain unchanged with fall in employment and output

Question 12

Demand-side unemployment is partly caused by:

Accepted Answer

A)  imperfections in the labour market
B)  occupational and geographic immobility of factors
C)  demographic changes
D)  a lack of aggregate demand

Question 13

According to monetary approach a revaluation of a nation's currency

Accepted Answer

A)  increase the nation's demand for money
B)  increase the nation's supply of money
C)  reduces the nation's demand for money
D)  reduces the nation's supply of money

Exam 4: Keynesian Analysis, Monetary Approach, and Classical Model