the existence of money leads to

greater specialization and higher SOL

which of the following shifts both the short-run and long-run aggregate suppl right?

an increase in the capital stock

the classical model is appropriate for analysis of the economy in the (LR=Long Run SR=Short run

LR, since real&nominal variables determined separately in LR

when inflation rises, the nominal interest rate

rises, and people desire to hold less money

inflation can be measured by the

percentage change in the consumer price index

which of the following is an example of barter?

barber gives plumber a haircut in exchange for fixing a leak

according to classical macroeconomic theory, changes in money supply affect

the price level, but not real GDP

in order to maintain stable price, a central bank must

tightly control the money supply

economists believe that classical macroeconomic theory is a good description of the economy

in the long, but not the short run

most economists believe that money neutrality holds

in the long run but not the short run

the quantity theory of money

can explain moderate inflation and hyperinflation

the aggregate-demand curve shows that a decrease in the price level

decreases dollar value of goods demanded in the economy

the long-run AS curve shows that by a permanent change in AD would lead to a long-run change

in the price level, but not the output

other things the same, an increase in price level makes consumers feel

less wealthy, quantity of demand falls

if aggregate demand shifts left, then in the short run

the price and real GDP both fall

the classical dichotomy and monetary neutrality are represented graphically by

a vertical long-run aggregate-supply curve

real/nominal var are intertwined and change money supply change real GDP. this describes

the short run, but not the long run

which of the following shifts long-run aggregate supply right?

increase in physical or human capital stock

when the money supply increases

interest rates fall and aggregate demand shifts right

when there is a reserve requirement, banks

may hold more, but not less, than the required reserves

the interest rate the Fed charges banks

the wealth effect, interest-rate effect, and exchange-rate effect are all explanations for

everything that makes the aggregate-demand curve shift

which of the following entities actually executes open-market operations?

Open Market Committees of the regional Federal Reserve Banks

tax cuts shift aggregate demand

right as do increases in government spending

ease which an asset converts to the medium of exchange

according to classical macroeconomic theory, changes in money supply affect

nominal variables, but not real variables

the price level rises in the short run if

aggregate demand shifts right or aggregate supply shift left

when the price level rises, the number of dollars needed to buy representative basket of goods

increases, and the value of money falls

the supply of money increases when

the fed makes open-market purchases

the aggregate-demand curve (D=demand

shows inverse relation between price level&quantity of goods

other things the same, a decrease in price level makes consumers feel

less wealthy, quantity of goods/services demand falls

the velocity of money is

average number of times per year a dollar is spent

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Macro Econ

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Questions 52

Answers

1
bank has $10,000 in deposits and $8,000 in loans. it has loaned out all it can, the reserve is
20%
2%
12.5%
2
the existence of money leads to
higher SOL, but not greater specialization
greater specialization and higher SOL
greater specialization in production, not to a higher SOL
neither greater specialization or higher SOL
3
which of the following shifts both the short-run and long-run aggregate suppl right?
an increase in the actual price level
none are correct
an increase in the capital stock
an increase in the expected price level
4
Money
is the most liquid asset
is a perfect store of value
all are correct
has intrinsic value, regardless of which form it takes
5
the classical model is appropriate for analysis of the economy in the (LR=Long Run SR=Short run
LR, since money is not neutral in the LR
SR, provided money is not neutral
LR, since real&nominal variables determined separately in LR
SR, provided real&nominal variables are highly intertwined
6
you receive money as payment for babysitting. this best illustrates which function of money?
store of value
medium of exchange
unit of account
liquidity
7
a bank's reserve ratio is 5% and has $1,000 in deposits. its reserves amount to
$5
$50
$95
$950
8
when prices are falling, economists say that there is
a contraction
disinflation
deflation
an inverted inflation
9
when inflation rises, the nominal interest rate
falls, and people desire to hold less money
rises, and people desire to hold more money
rises, and people desire to hold less money
falls, and people desire to hold more money
10
inflation can be measured by the
change in consumer price index
change in the price of a specific commodity
percentage change in the consumer price index
percentage change in the price of a specific commodity
11
which of the following is an example of barter?
all are examples of barter
homeowner gives exterminator a $50 check for service
parent gives teenage $190 in exchange for babysitting
barber gives plumber a haircut in exchange for fixing a leak
12
according to classical macroeconomic theory, changes in money supply affect
real GDP and the price level
neither the price level nor real GDP
the price level, but not real GDP
real GDP but not the price level
13
in order to maintain stable price, a central bank must
tightly control the money supply
maintain low interest rates
keep unemployment low
sell indexed bonds
14
economists believe that classical macroeconomic theory is a good description of the economy
in the long, but not the short run
in neither the short nor long run
in the short, but not the long run
in the short and the long run
15
most economists believe that money neutrality holds
in the long run but not the short run
in both the short run and the long run
in the short run but not the long run
in neither the short run nor the long run
16
the quantity theory of money
argues inflation is caused by too little money in economy
can explain moderate inflation and hyperinflation
all are correct
is a fairly recent addition to economic theory
17
the aggregate-demand curve shows that a decrease in the price level
decreases real value of goods demanded in the economy
decreases dollar value of goods demanded in the economy
increases dollar value of goods demanded in the economy
increases real value of goods demanded in the economy
18
Money
is more efficient than barter
all are correct
makes trades easier
allows greater specialization
19
the long-run AS curve shows that by a permanent change in AD would lead to a long-run change
in the price level and output
in the price level, but not the output
in output, but not the price level
in neither the price level nor output
20
other things the same, an increase in price level makes consumers feel
less wealthy, quantity of demand rises
more wealthy, quantity of demand rises
less wealthy, quantity of demand falls
more wealthy, quantity of demand falls
21
the costs of changing price tags and price listings are known as
shoeleather costs
inflation-induced tax distortions
menu costs
relative-price variability costs
22
during recessions
sales rise, profits fall
profits rise, sales fall
sales and profits fall
sales and profits rise
23
if aggregate demand shifts left, then in the short run
the price level rises and real GDP falls
the price level and real GDP both rise
the price and real GDP both fall
the price level falls and real GDP rises
24
the classical dichotomy and monetary neutrality are represented graphically by
an upward-sloping short-run aggregate-curve
an upward-sloping long-run aggregate-supply curve
a downward-sloping aggregate-demand curve
a vertical long-run aggregate-supply curve
25
real/nominal var are intertwined and change money supply change real GDP. this describes
the short run, but not the long run
bothe the short run and the long run
the long run, but not the short run
neither the long run nor the short run
26
which of the following shifts long-run aggregate supply right?
neither an increase in physical or human capital stock
increase in physical but not human capital stock
increase in physical or human capital stock
increase in human but not physical capital stock
27
the supply of money is determined by
the demand for money
the price level
the federal reserve system
the treasury and congressional budget office
28
when the money supply increases
interest rates rise and aggregate demand shifts left
interest rates fall and aggregate demand shifts right
interest rates rise and aggregate demand shifts right
interest rates fall and aggregate demand shifts left
29
when there is a reserve requirement, banks
must hold exactly the required quantity of reserves
may hold less, but not more, than the required reserves
may hold more, but not less, than the required reserves
30
the discount rate is
1 divided by the difference between 1 and the reserve ratio
the interest rate the Fed charges banks
the interest rate banks get on reserve deposits with Fed
interest rate banks charge on overnight loans to other banks
31
during a recession the economy experiences
falling employment and income
rising employment and falling income
rising employment and income
rising income and falling employment
32
the wealth effect, interest-rate effect, and exchange-rate effect are all explanations for
the slope of the aggregate-demand curve
the slope of long-run aggregate supply
the slope of short-run aggregate supply
everything that makes the aggregate-demand curve shift
33
which of the following entities actually executes open-market operations?
New York Federal Reserve Bank
Open Market Committees of the regional Federal Reserve Banks
Board of Governors
Federal Open Market Committee
34
tax cuts shift aggregate demand
left as do increases in government spending
right as do increases in government spending
left while increases in government spending shift AD right
right while increases in government spending shifts AD left
35
Liquidity refers to
how many times a dollar circulates in a given year
the measurment of the durability of a good
the measurement of the intrinsic value of commodity money
ease which an asset converts to the medium of exchange
36
according to classical macroeconomic theory, changes in money supply affect
nominal variables and real variables
neither nominal nor real variables
nominal variables, but not real variables
ral variables, but not nominal variables
37
which of the following lists is included in what economist call "money"?
cash
cash, stocks, bonds, real estate and all other assets
cash, stocks, bonds and real estate
cash, stocks and bonds
38
the price level rises in the short run if
aggregate demand or aggregate supply shift right
aggregate demand or aggregate supply shifts right
aggregate demand shifts left or aggregate supply shift right
aggregate demand shifts right or aggregate supply shift left
39
when the price level rises, the number of dollars needed to buy representative basket of goods
increases, and the value of money falls
increases, and so the value of money rises
decreases, and the value of money rises
decreases, and the value of money falls
40
other things the same, workers and firms expect prices by rise by 2% but instead they rise by 3
employment rises and production falls
employment and production rise
employment falls and production rises
employment and productionfall
41
during recessions
firms may find they are unable to sell all they produce
workers are laid off
factories are idle
all are correct
42
which part of real GDP fluctuates most over the course of the business cycle?
net exports
consumption expenditures
investment expenditures
government expenditures
43
which of the following is most commonly used to monitor short-run changes i economic activity>
aggregate demand
aggregate supply
the inflation rate
real GDP
44
the supply of money increases when
none are correct
the fed makes open-market purchases
the calue of money increases
the interest rate increases
45
the aggregate-demand curve (D=demand
is vertical in the long run
has slope explained same way as slope of D curve for product
all are correct
shows inverse relation between price level&quantity of goods
46
the long-rum aggregate supply curve
is a graphical representation of the classical dichotomy
indicates monetary neutrality in the long run
all are correct
is vertical
47
other things the same, a decrease in price level makes consumers feel
less wealthy, quantity of goods/services demand rises
less wealthy, quantity of goods/services demand falls
more wealthy, quantity of goods/services demand falls
more wealthy, quantity of goods/services demand rises
48
price level rises, but pay per hour stays the same. this means your
nominal wage is higher
real wage is lower
nominal wage is lower
real wage is higher
49
the velocity of money is
money supply divided by nominal GDP
same thing as long-term growth rate of the money supply
rate at which Fed puts money into the economy
average number of times per year a dollar is spent
50
if M=3,000, P=2, and Y=12,000, what is Velocity
2
1/2
8
4
51
for the us economy, which is the most important reason for the downward slope of the AD curve
the exchange-rate effect
the wealth effect
the interest-rate effect
the real-wage effect
52
the sticky-price theory implies that
unexpected fall in price, firms reduce quantity of good prod
short-run aggregate-supply curve is upward-sloping
menu costs influence the speed of adjustment of prices
all are correct

Macro Econ Flashcards | StudBud