Question 1

Stagflation results from

Accepted Answer

A)  a shift of the AS curve to the left.
B)  a shift of the AS curve to the right.
C)  a shift of the AD curve to the left.
D)  a shift of the AD curve to the right. A

Question 2

The short-run Aggregate Supply curve is upward sloping only because we assume that resource costs are held .

Accepted Answer

A)  constant
B)  flexible
C)  need more information
D)  none of the above A

Question 3

When using AD/AS analysis to illustrate changes within an economy, which of the following would NOT need to be considered when looking at changes to economic growth?

Accepted Answer

A)  Increased labour productivity
B)  More efficient use of the capital stock
C)  Developing a more efficient capital and finance sector
D)  Increased availability of social capital D

Question 4

If inflation is 6% and you receive a 1% raise in your nominal wage, by how much did your real wage change?

Accepted Answer

A)  -5%
B)  1%
C)  -6%
D)  6%

Question 5

CENTRAL BANK use contractionary monetary policy

Accepted Answer

A)  to increase govt expenditure
B)  to reduce inflation
C)  all of the above
D)  none of the above

Question 6

under fisher's quantity theory of money,M denoted

Accepted Answer

A)  medium
B)  the total quantity of legal tender money
C)  measurement tool
D)  money

Question 7

Which of these is NOT a monetary policy tool?

Accepted Answer

A)  open market operations
B)  balanced accounts
C)  reserve requirements
D)  discount rates

Question 8

Which of the following would NOT cause a SHIFT in AS?

Accepted Answer

A)  Incentives
B)  The structure of the economy
C)  The level of government spending
D)  The costs of the factors of production

Question 9

The phenomenon of sticky wages usually leads to unemployment during a recession.

Accepted Answer

A)  higher
B)  lower
C)  stabalize
D)  none of the above

Question 10

The Phillips curve implied that there was a trade- off available to governments between:

Accepted Answer

A)  The price level and unemployment
B)  The price level and employment
C)  Out put and employment
D)  Inflation and unemploymen t

Question 11

Which of the following is not a component of Aggregate Demand?

Accepted Answer

A)  Saving
B)  Investment
C)  Consumption
D)  Net Exports

Question 12

who is the head of the MONETARY POLICY committee?

Accepted Answer

A)  RBI, governor
B)  RBI, deputy governor
C)  Prime Minister
D)  President

Question 13

Which of the following is a major influence on AS?

Accepted Answer

A)  The quality of the factors available
B)  Consumption
C)  Government spending
D)  The advice of government

Question 14

Contractionary Fiscal Policy includes:

Accepted Answer

A)  slow economic growth
B)  stamp out inflation
C)  all of the above
D)  none of the above

Question 15

If inflation is 1% and you receive a 1% raise in your nominal wage, by how much did your real wage change?

Accepted Answer

A)  0%
B)  1%
C)  2%
D)  3%

Question 16

In the quantity theory of money, P and Y represent the price and quantity of:

Accepted Answer

A)  all finished goods and services in an economy.
B)  all finished goods sold in an economy.
C)  all finished goods and services sold in an economy.
D)  none of the above

Question 17

Which factor would shift the Aggregate Demand curve to the right?

Accepted Answer

A)  a fall in interest rates which increases investment
B)  an increase in real incomes due to a rise in GDP.
C)  an increase in real wages.
D)  an appreciation of the dollar.

Question 18

If Aggregate Demand exceeds Aggregate Supply, unwanted inventories will begin to accumulate, forcing firms to ______________prices to get rid of those inventories.

Accepted Answer

A)  zero
B)  none of these
C)  increase
D)  reduce

Question 19

An example of a government expenditure is

Accepted Answer

A)  a social security payment to an elderly person.
B)  employing a public school teacher.
C)  an unemployment insurance check.
D)  All of the above

Question 20

A belief that expectations were exogenous could lead one to the view that judgements about the future were likely to be based on:

Accepted Answer

A)  The best available information
B)  Past experience
C)  all of the above
D)  none of the above

Exam 1: Macroeconomic Concepts and Policies