Deck 1: Macroeconomic Concepts and Policies

Question 1

An economy is at equilibrium output when

A)Y = C + I + G + NX
B)Y = AD + C + G + NX
C)Y = AD + C + I + G + NX
D)Y = AD + C + I + G

Answer 1

Y = AD + C + I + G + NX

Question 2

CENTRAL BANK use contractionary monetary policy

A)to increase govt expenditure
B)to reduce inflation
C)all of the above
D)none of the above

Answer 2

to reduce inflation

Question 3

Which one of the following is the objective of fiscal policy?

A)achieve full employment.
B)stabilize the price level.
C)maintain equilibrium in the Balance of Payments.
D)all of the above

Answer 3

all of the above

Question 4

Contractionary Fiscal Policy includes:

A)slow economic growth
B)stamp out inflation
C)all of the above
D)none of the above

Question 5

under fisher's quantity theory of money,M denoted

A)medium
B)the total quantity of legal tender money
C)measurement tool
D)money

Question 6

who is the head of the MONETARY POLICY committee?

A)RBI, governor
B)RBI, deputy governor
C)Prime Minister
D)President

Question 7

The phenomenon of sticky wages usually leads to unemployment during a recession.

A)higher
B)lower
C)stabalize
D)none of the above

Question 8

If inflation is 6% and you receive a 1% raise in your nominal wage, by how much did your real wage change?

A)-5%
B)1%
C)-6%
D)6%

Question 9

If inflation is 1% and you receive a 1% raise in your nominal wage, by how much did your real wage change?

A)0%
B)1%
C)2%
D)3%

Question 10

The quantity theory of money is expressed by the identity equation:

A)M*Y=P+Y
B)M*V=P*Y
C)M+V=P
D)none of the above

Question 11

In the quantity theory of money, P and Y represent the price and quantity of:

A)all finished goods and services in an economy.
B)all finished goods sold in an economy.
C)all finished goods and services sold in an economy.
D)none of the above

Question 12

Which of the following is not a component of Aggregate Demand?

A)Saving
B)Investment
C)Consumption
D)Net Exports

Question 13

An example of a government expenditure is

A)a social security payment to an elderly person.
B)employing a public school teacher.
C)an unemployment insurance check.
D)All of the above

Question 14

Which of the following items is an investment?

A)purchase of a mutual fund.
B)purchase of a U.S. government bond.
C)purchase of a new farm tractor.
D)purchase of a stock.

Question 15

Which factor would shift the Aggregate Demand curve to the right?

A)a fall in interest rates which increases investment
B)an increase in real incomes due to a rise in GDP.
C)an increase in real wages.
D)an appreciation of the dollar.

Question 16

When using AD/AS analysis to illustrate changes within an economy, which of the following would NOT need to be considered when looking at changes to economic growth?

A)Increased labour productivity
B)More efficient use of the capital stock
C)Developing a more efficient capital and finance sector
D)Increased availability of social capital

Question 17

Which of the following is a major influence on AS?

A)The quality of the factors available
B)Consumption
C)Government spending
D)The advice of government

Question 18

The Phillips curve implied that there was a trade- off available to governments between:

A)The price level and unemployment
B)The price level and employment
C)Out put and employment
D)Inflation and unemploymen t

Question 19

A belief that expectations were exogenous could lead one to the view that judgements about the future were likely to be based on:

A)The best available information
B)Past experience
C)all of the above
D)none of the above

Question 20

Which of these is NOT a monetary policy tool?

A)open market operations
B)balanced accounts
C)reserve requirements
D)discount rates

Question 21

Stagflation results from

A)a shift of the AS curve to the left.
B)a shift of the AS curve to the right.
C)a shift of the AD curve to the left.
D)a shift of the AD curve to the right.

Question 22

An increase in aggregate demand (given no change in aggregate supply) will cause______________ inflation.

A)constant
B)higher
C)lower
D)none of the above

Question 23

Which of the following would NOT cause a SHIFT in AS?

A)Incentives
B)The structure of the economy
C)The level of government spending
D)The costs of the factors of production

Question 24

Which of the following events will shift the Aggregate Supply curve to the left?

A)a fall in interest rates.
B)land costs fall.
C)real wages rise.
D)inflation expectations decrease.

Question 25

The short-run Aggregate Supply curve is upward sloping only because we assume that resource costs are held .

A)constant
B)flexible
C)need more information
D)none of the above

Question 26

If Aggregate Demand exceeds Aggregate Supply, unwanted inventories will begin to accumulate, forcing firms to ______________prices to get rid of those inventories.

A)zero
B)none of these
C)increase
D)reduce