Question 1
2.5 / 2.5 points
The __________ is the amount by which a change in autonomous expenditures is multiplied in order to determine the change in equilibrium expenditure that it generates.
Question options:
marginal tax rate
marginal multiplier
expenditure reducer
expenditure multiplier
Question 2
2.5 / 2.5 points
When the Federal Reserve changes the quantity of money and the interest rate, it influences aggregate demand by using __________.
Question options:
the world economy
consumer expectations
monetary policy
fiscal policy
Question 3
2.5 / 2.5 points
The change in equilibrium expenditure also equals the change in __________.
Question options:
the potential GDP
the real GDP
income taxes
interest rates
Question 4
0 / 2.5 points
What represents the relationship between the quantity of real GDP supplied and the price level when all other influences on production plans remain the same?
Question options:
aggregate demand
aggregate supply
the money wage rate
the money price index
Question 5
2.5 / 2.5 points
When the real GDP increases, disposable income and consumption expenditure __________.
Question options:
do not change
become inverted
decrease
increase
Question 6
2.5 / 2.5 points
All other things remaining the same, the lower the price level, the __________ the quantity of real GDP demanded.
Question options:
smaller
greater
more constant
less constant
Question 7
2.5 / 2.5 points
When the price level increases, the real interest rate __________.
Question options:
is not affected
falls
rises
will rise or fall depending on demand
Question 8
2.5 / 2.5 points
If the price level from the GDP price index falls, what happens to the quantity of real GDP supplied?
Question options:
it remains constant
it increases
it decreases
it barely changes
Question 9
2.5 / 2.5 points
What represents the relationship between the quantity of real GDP demanded and the price level when all other influences on expenditure plans remain the same?
Question options:
aggregate demand
aggregate supply
the money wage rate
the money price index
Question 10
2.5 / 2.5 points
All other things remaining the same, the higher the price level, the __________ the quantity of real GDP supplied.
Question options:
smaller
greater
more constant
less constant
Question 11
2.5 / 2.5 points
What are the two main influences that the world economy has on aggregate demand?
Question options:
foreign exchange rate and foreign income
foreign investments and foreign profit
revenues from overseas and foreign exchange rate
foreign expenditures and international trade
Question 12
2.5 / 2.5 points
Which of the following would cause an increase in aggregate demand in the short run?
Question options:
an increase in the supply of money
a decrease in the price level
an increase in taxes
a crop failure
Question 13
2.5 / 2.5 points
The marginal __________ is the fraction of a change in real GDP that is paid in income tax.
Question options:
tax rate
income
GDP
tax revenue
Question 14
2.5 / 2.5 points
__________ occurs when aggregate planned expenditure equals real GDP.
Question options:
Price-fixing
Stable economic leveling
Unplanned inventory change
Equilibrium expenditure
Question 15
2.5 / 2.5 points
Which of the following does NOT decrease aggregate demand in the United States?
Question options:
a decrease in the price of oil
a decrease in GDP in Germany
a decrease in government spending
a decrease in the supply of money
Question 16
2.5 / 2.5 points
How does an increase in potential GDP affect aggregate supply?
Question options:
It decreases aggregate supply.
It increases aggregate supply.
It barely has any effect.
Since it applies to an “imaginary” market, it does not affect aggregate supply.
Question 17
2.5 / 2.5 points
To determine the equilibrium price level and equilibrium level of real GDP, the aggregate demand and aggregate supply must __________.
Question options:
be considered separately
intersect
be disregarded
be considered as a multiplier
Question 18
2.5 / 2.5 points
The __________ curve summarizes the relationship between aggregate planned expenditure and the real GDP.
Question options:
AES
AE
AD
APE
Question 19
2.5 / 2.5 points
A rise in the price level __________ the buying power of money.
Question options:
does not affect
increases
decreases
inverts
Question 20
2.5 / 2.5 points
What is the total amount of final goods and service produced in a country that people, businesses, governments, and foreigners plan to buy?
Question options:
the supply-demand model
the quantity of real GDP supplied
the quantity of potential GDP
the quantity of real GDP demanded
Lesson 7
Question 21
0 / 2.5 points
Since the long-run Phillips curve is vertical at the natural unemployment rate, what type of trade-off is there between employment and inflation?
Question options:
There is no trade-off between employment and inflation.
There is a constant trade-off between employment and inflation.
There is a linear trade-off between employment and inflation.
Employment and inflation are indirectly proportional (the one goes up, the other goes down..
Question 22
2.5 / 2.5 points
In the short run, increases in the money supply increase the level of output because __________.
Question options:
prices and wages are sticky
prices and wages are flexible
interest rates are sticky
demand is fixed
Question 23
2.5 / 2.5 points
Say’s law from a classical economic perspective __________.
Question options:
states that supply creates its own demand
explains the classical idea that the value of GDP will equal the demand for goods and services
supports economists belief that neither surplus nor shortage would ever exist when production and demand are equal for goods and services
all of the above
Question 24
2.5 / 2.5 points
What policy action by the Fed describes an unexpected rise in interest rates and deceleration in money growth in order to slow inflation at the cost of recession?
Question options:
rational reduction
surprise inflation reduction
credible announced inflation reduction
statistical model of reduction
Question 25
2.5 / 2.5 points
Classical economics refers to a body of work initially developed by __________.
Question options:
Keynes
Malthus
Say
Smith
Question 26
2.5 / 2.5 points
To lower the expected inflation rate, the Fed must take actions that will __________ the actual inflation rate.
Question options:
decelerate
accelerate
increase
decrease
Question 27
2.5 / 2.5 points
In __________, monetary policy can change the level of output.
Question options:
the long run only
both the short run and the long run
neither the short run nor the long run
the short run only
Question 28
2.5 / 2.5 points
What is the difference between how GDP is determined in the short run and how it is determined in the long run?
Question options:
In the short run, GDP is determined by current demand for goods and services in the economy. In the long run, GDP is determined by supply of labor, the stock of capital and technological progress.
In the short run, GDP is determined by future demand for goods and services in the economy. In the long run, GDP is determined by supply of labor, the stock of capital and technological progress.
In the long run, GDP is determined by current demand for goods and services in the economy. In the short run, GDP is determined by supply of labor, the stock of capital and technological progress.
In the long run, GDP is determined by future demand for goods and services in the economy. In the short run, GDP is determined by supply of labor, the stock of capital and technological progress.
Question 29
2.5 / 2.5 points
If the natural unemployment rate increases, the short-term Phillips curve __________ and the long-run Phillips curve __________.
Question options:
shifts rightward; shifts rightward
shifts leftward; shifts leftward
shifts rightward; remains the same
shifts leftward; remains the same
Question 30
2.5 / 2.5 points
A decrease in aggregate demand that brings a movement down along the aggregate supply curve lowers the price level and __________ real GDP.
Question options:
does not affect
decreases
increases
varies with
Question 31
2.5 / 2.5 points
What policy action by the Fed describes when people believe that the Fed will lower the inflation rate, and the expected inflation rate falls in order to slow the inflation rate without any accompanying loss of output or increase in unemployment?
Question options:
rational reduction
surprise inflation reduction
credible announced inflation reduction
statistical model of reduction
Question 32
2.5 / 2.5 points
What is the proposition that when the inflation rate changes, the unemployment rate changes temporarily and then turns to the natural unemployment rate?
Question options:
the trade-off theory
the natural rate hypothesis
Okun’s law
Phillip’s monetary policy
Question 33
2.5 / 2.5 points
The doctrine that states that "supply creates its own demand" is called __________ law.
Question options:
Keynes’s
Smith’s
Say’s
Malthus’s
Question 34
0 / 2.5 points
How does change in the expected inflation rate affect the short-run tradeoff between inflation and unemployment?
Question options:
Immediately, because the money wage rate is sensitive to change in the expected inflation rate.
Immediately, because unemployment and job production respond quickly to change in the expected inflation rate.
Gradually, because the money wage rate responds only gradually to change in the expected inflation rate.
Gradually, because the natural unemployment rate rarely changes.
Question 35
2.5 / 2.5 points
Suppose that the unemployment rate is __________ the natural rate. We would expect prices to fall, money demand to fall, interest rates to fall, and total demand to __________.
Question options:
above; rise
above; fall
below; rise
below; fall
Question 36
2.5 / 2.5 points
In the long run, a decrease in the money supply __________.
Question options:
has no effect on real interest rates, investment, or output
increases real interest rates, decreases investment, and decreases output
increases real interest rates, increases investment, and decreases output
decreases real interest rates, decreases investment, and decreases output
Question 37
2.5 / 2.5 points
The Keynesian view that demand could fall short of production is more likely to hold true if __________.
Question options:
wages and prices are fully flexible
prices, but not wages, are fully flexible
wages and prices are not fully flexible
wages, but not prices, are fully flexible
Question 38
2.5 / 2.5 points
The trade-off between inflation and unemployment occurs when a lower unemployment rate brings a __________.
Question options:
lower inflation rate
higher inflation rate
lower aggregate supply
higher aggregate supply
Question 39
2.5 / 2.5 points
The short-run Phillips curve is another way at looking at the __________.
Question options:
equilibrium expenditure
AD curve
aggregate supply (AS. curve
potential GDP
Question 40
2.5 / 2.5 points
Keynes expressed doubts that that the economy would __________.
Question options:
ever return to full-employment
ever move away from full-employment
recover from a major recession without active policy
recover from the effects of higher prices
