Macroeconomics Questions

When the economy is in a recession, the government will want to increase output. If the multiplier equals 2.5 and the government increases spending by 200, how much will output increase by?100300500900

If a Phillip curve shows that unemployment is low and inflation is high in the economy, then that economy:is producing at its potential GDP.is producing at a point where output is more than potential GDP.is producing at a point where output is less than potential GDP.is producing at its equilibrium point.

According to the Keynesian framework, which of the following may help a country reduce inflation, but will not help that country to get out of a recession?increased spending by the government on health carean increase in taxes on business investmentsan increase in military spendinga decrease in the tax rate on consumer income

The neoclassical view holds that long-term expansion of potential GDP due to _______________________ will determine ____________________.economic growth; the size of the economygovernment spending; aggregate demandgovernment spending; aggregate supplyeconomic adjustments; cyclical unemployment

If mollusk shells were accepted as a method of payment in modern-day markets, what economic role would they play in the financial system?capital exchangecurrency exchangeunit of exchangemedium of exchange

Which of the following would be classified in the M1 category of the money supply?savings depositsmoney market depositdemand depositscertificates of deposit

The term ___________________ describes the proportion of deposits that the bank must hold in the form of reserves that are not loaned out or invested in bonds.reserve ratioreserve fundsterm depositsbond reserves

In modern economies, _____________________ receive money from savers and provide funds to borrowers.governmentscredit unionsbanksfinancial intermediaries

In an economy with _______________, money loses some buying power each year, but it remains money.inflationcurrencydeflationa market orientation

In modern economies, credit cards are a _________________ because of their wide acceptance as a method of payment for both goods and services.unit of exchangestore of valueunit of accountmedium of exchange

Which of the following is a valid criticism of the rational expectations theory?prices do not wait on eventsthe assumption seems too strongpeople form the most accurate possible expectations adjustment of wages and prices might be quite rapid

According to macroeconomic theory, evidence that high unemployment may be accompanied by low inflation, and low unemployment may be accompanied by high inflation is supported by the:neoclassical expenditure-output model. Keynesian cross diagram.Keynesian Phillips curve tradeoff.Keynesian Inflation trade-off model.

Referring to the diagram above, which of the following is a true statement?The increase in supply (Q1 to Q2) may come about because of increased money supply.The increase in output (Q1 to Q2) may come about because of lower levels of taxation.The increase in supply (Q1 to Q2) may result from decreased government spending.The increase in supply (Q1 to Q2) may result from decreased government spending.

The quantity of money in an economy and the _____________________ are inextricably intertwined.value of assets for loansquantity of credit for loansfinancial stress in the banking systemextraordinary gains that can be made with money

The neoclassical perspective on macroeconomics emphasizes that in the long run, the economy seems to rebound back to its _____________ and its ____________________.long term growth; cyclical unemploymentpotential GDP; natural rate of unemploymentnatural level of output; cyclical unemployment ratereal GDP; natural rate of unemployment

Which statement describes the neoclassical perspective?In the neoclassical perspective, aggregate demand will determine output at potential GDP, unemployment is determined by the natural rate of unemployment churned out by the forces of supply and demand in the labor market, and shifts in aggregate supply are the primary determinant of changes in the price level.In the neoclassical perspective, aggregate supply will determine output at potential GDP, unemployment is determined by the natural rate of unemployment churned out by the forces of supply and demand in the labor market, and shifts in aggregate demand are the primary determinant of changes in the price level.In the neoclassical perspective, aggregate supply will determine output at potential GDP, unemployment is determined by the natural rate of unemployment churned out by the forces of supply and demand in the labor market, and shifts in aggregate supply are the primary determinant of changes in the price level.In the neoclassical perspective, aggregate demand will determine output at potential GDP, unemployment is determined by the natural rate of unemployment churned out by the forces of supply and demand in the labor market, and shifts in aggregate demand are the primary determinant of changes in the price level.

In the neoclassical model, the AS curve shifts to the right over time as_______________________ and potential GDP expands.the macroeconomy adjusts back to real GDPproductivity increasesthe level of real output dropsaggregate demand increases

The economy is in a recession and the government wants to increase output. If the multiplier equals 3 and the government increases spending by 250, how much will output increase by?50100200750

From a neoclassical perspective, which of the following would most likely be viewed as an element that underpins long-run productivity growth in the economy?flexible price levelsflexible market forcesinvestments in human capitalhigher unemployment

If a Phillips curve shows that unemployment is high and inflation is low in the economy, then that economy:is producing at its potential GDP.is producing at a point where output is more than potential GDP.is producing at a point where output is less than potential GDP.is producing at its equilibrium point.