Question 1

Suppose ATM costs increased because of additional security required to prevent electronic fraud.Explain how this would affect money demand, aggregate demand, output, and the price level in the short run and the long run.

Accepted Answer

The answer of Suppose ATM costs increased because of additional...

Question 2

The_____ believe that an economy will adjust on its own without any government policy interventions.

Accepted Answer

A) Keynesians 
B) classical economists 
C) monetarists 
D) institutional economists

Question 3

In the aggregate demand-aggregate supply model, everything else remaining unchanged, an increase in taxes causes ____to _____in the short run.

Accepted Answer

A) output; increase 
B) output; decline 
C) output; remain unchanged 
D) government spending; increase

Question 4

Aggregate supply tells us

Accepted Answer

A) the amount of goods and services being purchased in an economy. 
B) the amount of goods and services being produced in an economy. 
C) the total amount of physical capital in an economy. 
D) the total amount of investments in an economy.

Question 5

Describe the arguement put forward by the Nobel laurete Robert E.Lucas about the flaws in the large structural macroeconomic models.

Accepted Answer

The answer of Describe the arguement put forward by the...

Question 6

Investment spending on physical capital is about ______of aggregate demand.

Accepted Answer

A) 1/10 
B) 1/6 
C) 1/4 
D) 1/2

Question 7

In the aggregate demand-aggregate supply model, everything else remaining unchanged, a decrease in government spending shifts the ____curve to the_____ .

Accepted Answer

A) aggregate demand; right 
B) aggregate demand; left 
C) aggregate supply; right 
D) aggregate supply; left

Question 8

The nominal interest rate in an economy decreases when

Accepted Answer

A) the aggregate demand curve shifts to the left. 
B) the money supply curve shifts to the left. 
C) the aggregate supply curve shifts to the right. 
D) the money demand curve shifts to the left.

Question 9

A rise in the price level in an economy

Accepted Answer

A) shifts its long-run aggregate supply curve to the right. 
B) shifts its long-run aggregate supply curve to the left. 
C) does not have any effect on its long-run aggregate supply. 
D) does not have any effect on its aggregate demand.

Question 10

With the price level on the vertical axis and output on the horizontal axis, the short-run aggregate-supply curve

Accepted Answer

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

Question 11

With the price level measured on the vertical axis and output measured on the horizontal axis, the long-run aggregate-supply curve

Accepted Answer

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

Question 12

Which of the following is an investment spending?

Accepted Answer

A) Purchase of stocks 
B) Purchase of bonds 
C) Purchase of office building 
D) Purchase of refrigerator by a household

Question 13

A rise in income will cause consumer spending to

Accepted Answer

A) decline. 
B) not change. 
C) rise. 
D) fall at first, then rise later.

Question 14

The amount of output produced when the unemployment rate equals the natural rate of employment in an economy is called_____ output.

Accepted Answer

A) natural 
B) aggregate 
C) full-employment 
D) long-run

Question 15

In the aggregate demand-aggregate supply model, everything else remaining unchanged, an increase in production costs shifts the _____curve to the _____.

Accepted Answer

A) long-run aggregate supply; right 
B) long-run aggregate supply; left 
C) short-run aggregate supply; right 
D) short-run aggregate supply; left

Question 16

The largest component of aggregate demand is

Accepted Answer

A) net exports. 
B) government spending. 
C) investment. 
D) consumption.

Question 17

If an economy is in a recession, with output below its full-employment level, a(n)_____ return the economy to its long-run equilibrium, which would cause the price level to_____

Accepted Answer

A) expansionary; increase 
B) expansionary; decline 
C) contractionary; decline 
D) contractionary; increase

Question 18

The argument that a change in policy systematically alters the structure of econometric models is known as the

Accepted Answer

A) Keynesian cross. 
B) cross-equation restriction. 
C) Lucas critique. 
D) endogeneity principle.

Question 19

One of the reasons that led to the inconsistency of the large structural macroeconomic models was

Accepted Answer

A) that endogenous variables such as foreign output were treated as exogenous. 
B) that all equations were estimated together to test their interrelations with one another. 
C) that individual equations were estimated in isolation with one another. 
D) that exogenous variables such as level of technology were treated as endogenous.

Question 20

Purchases of new houses are part of

Accepted Answer

A) net exports. 
B) government spending. 
C) investment. 
D) consumption.

Exam 12: The Aggregate-Demandaggregate-Supply Model

Suppose ATM costs increased because of additional security required to prevent electronic fraud.Explain how this would affect money demand, aggregate demand, output, and the price level in the short run and the long run.

The_____ believe that an economy will adjust on its own without any government policy interventions.

In the aggregate demand-aggregate supply model, everything else remaining unchanged, an increase in taxes causes to _in the short run.

Aggregate supply tells us

Describe the arguement put forward by the Nobel laurete Robert E.Lucas about the flaws in the large structural macroeconomic models.

Investment spending on physical capital is about ______of aggregate demand.

In the aggregate demand-aggregate supply model, everything else remaining unchanged, a decrease in government spending shifts the curve to the_ .

The nominal interest rate in an economy decreases when

A rise in the price level in an economy

With the price level on the vertical axis and output on the horizontal axis, the short-run aggregate-supply curve

With the price level measured on the vertical axis and output measured on the horizontal axis, the long-run aggregate-supply curve

Which of the following is an investment spending?

A rise in income will cause consumer spending to

The amount of output produced when the unemployment rate equals the natural rate of employment in an economy is called_____ output.

In the aggregate demand-aggregate supply model, everything else remaining unchanged, an increase in production costs shifts the _curve to the _.

The largest component of aggregate demand is

If an economy is in a recession, with output below its full-employment level, a(n) _ return the economy to its long-run equilibrium, which would cause the price level to_

The argument that a change in policy systematically alters the structure of econometric models is known as the

One of the reasons that led to the inconsistency of the large structural macroeconomic models was

Purchases of new houses are part of

Exam 12: The Aggregate-Demandaggregate-Supply Model

Suppose ATM costs increased because of additional security required to prevent electronic fraud.Explain how this would affect money demand, aggregate demand, output, and the price level in the short run and the long run.

The_____ believe that an economy will adjust on its own without any government policy interventions.

In the aggregate demand-aggregate supply model, everything else remaining unchanged, an increase in taxes causes ____to _____in the short run.

Aggregate supply tells us

Describe the arguement put forward by the Nobel laurete Robert E.Lucas about the flaws in the large structural macroeconomic models.

Investment spending on physical capital is about ______of aggregate demand.

In the aggregate demand-aggregate supply model, everything else remaining unchanged, a decrease in government spending shifts the ____curve to the_____ .

The nominal interest rate in an economy decreases when

A rise in the price level in an economy

With the price level on the vertical axis and output on the horizontal axis, the short-run aggregate-supply curve

With the price level measured on the vertical axis and output measured on the horizontal axis, the long-run aggregate-supply curve

Which of the following is an investment spending?

A rise in income will cause consumer spending to

The amount of output produced when the unemployment rate equals the natural rate of employment in an economy is called_____ output.

In the aggregate demand-aggregate supply model, everything else remaining unchanged, an increase in production costs shifts the _____curve to the _____.

The largest component of aggregate demand is

If an economy is in a recession, with output below its full-employment level, a(n) _____ return the economy to its long-run equilibrium, which would cause the price level to_____

The argument that a change in policy systematically alters the structure of econometric models is known as the

One of the reasons that led to the inconsistency of the large structural macroeconomic models was

Purchases of new houses are part of

In the aggregate demand-aggregate supply model, everything else remaining unchanged, an increase in taxes causes to _in the short run.

In the aggregate demand-aggregate supply model, everything else remaining unchanged, a decrease in government spending shifts the curve to the_ .

In the aggregate demand-aggregate supply model, everything else remaining unchanged, an increase in production costs shifts the _curve to the _.

If an economy is in a recession, with output below its full-employment level, a(n) _ return the economy to its long-run equilibrium, which would cause the price level to_