ECONOMIC question

Anonymous
timer Asked: Apr 27th, 2017

Question description

7 multiple choice questions

QUESTION 2 As the aggregate demand curve shifts leftward along a given aggregate supply curve, a. unemployment is higher and inflation is lower. b. unemployment is lower and inflation is higher. c. unemployment and inflation are higher. d. unemployment and inflation are lower. QUESTION 10 As real GDP falls, a. money demand rises, so the interest rate falls b. money demand falls, so the interest rate falls. c. money demand rises, so the interest rate rises. d. money demand falls, so the interest rate rises. QUESTION 14 An example of an automatic stabilizer is a. a lowering of interest rates by the Fed. b. unemployment benefits. c. a decrease in money demand. d. a decrease in tax rates in response to a recession. QUESTION 17 Initially, the economy is in long-run equilibrium. Aggregate demand then shifts leftward by $50 billion. The government wants to increase its spending in order to avoid a recession. If the crowding-out effect is always one-third as strong as the multiplier effect, and if the MPC equals 0.6, then by how much do government purchases have to increase in order to offset the $50 billion leftward shift? a. by $90 billion b. by $30 billion c. by $60 billion d. by $20 billion QUESTION 19 A policy change that changes the natural rate of unemployment changes a. both the long-run Phillips curve and the long-run aggregate supply curve. b. the long-run aggregate supply curve, but not the long-run Phillips curve. c. the long-run Phillips curve, but not the long-run aggregate supply curve. d. neither the long-run Phillips curve nor the long-run aggregate supply curve. QUESTION 20 If taxes rise, then aggregate demand shifts a. left, making unemployment lower than otherwise. b. right, making unemployment lower than otherwise. c. left, making unemployment higher than otherwise. d. right, making unemployment higher than otherwise. QUESTION 30 Consider two countries: Eastland and Westland. Eastland’s long-run Phillips curve sits further to the right than does Westland’s long-run Phillips curve. Eastland and Westland are identical in all other ways. In particular, they have the same money supply growth rates. In the long run, compared to Westland, which of the following will we observe in Eastland? a. higher unemployment and higher inflation. b. higher unemployment and the same rate of inflation. c. lower unemployment and higher inflation. d. None of the above is correct.

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