An increase in aggregate demand

causes movement up the Phillips curve toward inflation

An increase in aggregate supply

shifts the Phillips curve to the left

A negative aggregate supply shock will

shift the Phillips curve to the right

According to Keynesian theory, instability is caused by

unexpected shifts in aggregate demand

If the government places a price ceiling on interest rates,

QD for loanable funds increases

According to monetarists,

changes in the money supply create instability

When do federal budget deficits occur?

the gov't spends more revenue than it collects in taxes

The long-run Phillips curve

is vertical at the natural rate of unemployment

Monetarists believe the economy is inherently

stable, needs less government involvement

If taxes are too high, supply-siders believe

tax cuts increase tax revenue (voo-doo!)

In the long run, the Phillips curve shows

the natural rate of UE is independent of fiscal policy

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Unit V 2nd Semester 2017

43 termsStudBud Administration149 plays

AP Econ Unit V

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Questions 43

Answers

1
An increase in aggregate demand
causes movement up the Phillips curve toward inflation
shifts the Phillips curve to the right
causes movement down the Phillips curve toward unemployment
Shifts the phillips curve to the left
2
Classical economists argue that unemployment
can be solved by increasing the money supply
can be solved by increasing AD
can be solved by increasing AS
can be solved by doing nothing
3
Invisible hand
rational expectations
Monetarism
classical
Keynesian
4
People's ability to anticipate price level changes allows them to fix the economy
rational expectations
Keynesian
monetarism
classical
5
Which of the following could change the demand for loanable funds?
consumer borrowing
all of the above
government borrowing
business borrowing
6
If the economy is in a recession and the government does nothing (classical theory)
rising wages shift AD right
rising wages shift AS left
falling wages shift AD right
falling wages shift AS right
7
An increase in which of the following will increase aggregate demand?
taxes
discount rate
government spending
federal funds rate
8
If the government uses expansionary fiscal policy,
aggregate supply rises
aggregate demand falls
inflation rises
unemployment rises
9
An increase in aggregate supply
causes movement down the Phillips curve
causes movement up the Phillips curve
shifts the Phillips curve to the left
shifts the Phillips curve to the right
10
The Federal Reserve could have stopped the Great Depression but it was filled with idiots
rational expectations
Keynesian
Monetarism
classical
11
A negative aggregate supply shock will
shift AD to the right
be a result of rising productivity
shift the Phillips curve to the right
all of the above
12
According to Keynesian theory, instability is caused by
changes in the labor force
government interference in the economy
unexpected shifts in aggregate demand
erratic growth of the money supply
13
Which of the following will affect the long-run growth rate of an economy?
labor supply
all of the above
spending on education
real interest rate
14
According to rational expectations, monetary policy
increases AS
has no effect
increases AD
causes deflation
15
Which of the following can change aggregate supply?
aggregate demand
exports
labor productivity
government spending
16
If the government places a price ceiling on interest rates,
QD for loanable funds increases
QS of loanable funds increases
QD for loanable funds decreases
QS of loanable funds remains unchanged
17
Stagflation is caused by
increase in aggregate supply
increase in aggregate demand
increase in imports
decrease in aggregate supply
18
Which of the following would most likely stimulate economic growth?
technological growth
decreased wages
increase transfer payments
decreased savings
19
Which of the following can affect the growth of the economy?
capital goods
technology
natural resources
all of the above
20
An increase in PPC is analogous to an increase in
income tax rates
exports
LRAS
transfer payments
21
structural unemployment
lose your derb to a robot
leave your jorb to look for a new one
winter took my jerb!
lose your jerb during a recession
22
According to monetarists,
expansionary fiscal policy lowers interest rates
changes in the money supply have no effect on price level
changes in the velocity of money affect GDP
changes in the money supply create instability
23
The supply-side graph
Phillips curve
Laffer curve
Occam's Razor
loanable funds market
24
A decrease in investment caused by an increase in government spending
none of the above
net export effect
crowding out effect
interest rate effect
25
Which is a supply-side policy?
reduce corporate income taxes
increase in government spending
increase taxes on alcohol and gambling
decrease the money supply
26
When the Fed buys bonds on the open market, what decreases?
interest rates
investment
taxes
the money supply
27
If demand for loanable funds decreases,
interest rates fall
government spending rises
interest rates rise
interest rates remain unchanged
28
Which of these is an example of infrastructure?
technology
interstate highways
labor force
economies of scale
29
When do federal budget deficits occur?
the IRS spends more money than it collects
the gov't spends more revenue than it collects in taxes
high levels of unemployment use up taxes
too much money spent on entitlement programs
30
The time in which nominal wages and resources prices are unresponsive to price level changes
short run
long run
31
The economy will not fix itself
Keynesian
rational expectations
classical
Monetarism
32
According to the SRPC, if unemployment decreases
real GDP decreases
productivity increases
inflation increases
deficit increases
33
Total spending exceeds the economy's ability to provide output
stagflation
demand-pull inflation
cost-push inflation
34
The long-run Phillips curve
is vertical at the natural rate of unemployment
is created by an adverse supply shock
shows there's a trade-off between inflation and unemployment
It has nothing to do with the natural rate of unemployment
35
Which of the following could increase the supply of loanable funds?
a decrease in investment spending
an increase in savings
the sale of bonds by the Fed
an increase in demand for imports
36
With the SRPC, there is a trade off between
unemployment and inflation
price level stability and income equality
unemployment and income equality
economic growth and full employment
37
Monetarists believe the economy is inherently
unstable, needs less government involvement
stable,needs more government involvement
stable, needs less government involvement
unstable, needs more government involvement
38
If taxes are too high, supply-siders believe
tax cuts increase tax revenue (voo-doo!)
tax cuts reduce tax revenue
tax cuts increase government spending
tax cuts have no effect on tax revenue
39
In the long run, the Phillips curve shows
UE increases, inflation increases
the natural rate of UE is independent of fiscal policy
changes in AD cause deflation
UE decreases, inflation decreases
40
If we lower business taxes, how will AS and UE change?
AS increase, UE increase
AS decrease, UE increases
AS decrease, UE decrease
AS increase, UE decrease
41
Supply-side economists believe taxes are
too low
too high
juuuuuuuuust right
42
Supply-side economists argue that tax cuts
decrease GDP
increase unemployment
affect aggregate demand
affect aggregate supply
43
MV=PQ
Keynesian
rational expectations
Monetarism
classical

Unit V 2nd Semester 2017 Flashcards | StudBud