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

everything that makes the aggregate-demand curve shift

in order to maintain stable price, a central bank must

tightly control the money supply

which of the following is an example of barter?

barber gives plumber a haircut in exchange for fixing a leak

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

less wealthy, quantity of demand falls

the interest rate the Fed charges banks

the aggregate-demand curve (D=demand

shows inverse relation between price level&quantity of goods

tax cuts shift aggregate demand

right as do increases in government spending

most economists believe that money neutrality holds

in the long run but not the short run

the existence of money leads to

greater specialization and higher SOL

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

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

in the long, but not the short run

the quantity theory of money

can explain moderate inflation and hyperinflation

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

increases, and the value of money falls

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

Open Market Committees of the regional Federal Reserve Banks

when the money supply increases

interest rates fall and aggregate demand shifts right

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

the classical dichotomy and monetary neutrality are represented graphically by

a vertical long-run aggregate-supply curve

the price level rises in the short run if

aggregate demand shifts right or aggregate supply shift left

according to classical macroeconomic theory, changes in money supply affect

nominal variables, but not real variables

the supply of money increases when

the fed makes open-market purchases

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 there is a reserve requirement, banks

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

ease which an asset converts to the medium of exchange

the velocity of money is

average number of times per year a dollar is spent

according to classical macroeconomic theory, changes in money supply affect

the price level, but not real GDP

when inflation rises, the nominal interest rate

rises, and people desire to hold less money

if aggregate demand shifts left, then in the short run

the price and real GDP both fall

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

less wealthy, quantity of goods/services demand falls

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

decreases dollar value of goods demanded in the economy

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Macro Econ

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Questions 52

Answers

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

Macro Econ Flashcards | StudBud