Macroeconomics 2 (OFFICIAL)

Question 1

With sticky nominal wages an unexpected decline in aggregate demand can be expected to cause:

Answer 1

Both price and Real decrease in the Short-Run

Question 2

Following shifts can explain an increase in the price level and decrease in real output:

Answer 2

A leftward shift in the Short-Run Aggregate Supply Curve.

Question 3

Privet property rights:

Answer 3

As they see and help their neighbors.

Question 4

Technological refers to:

Answer 4

Knowledge of current value of GDP and CPI

Question 5

Real interest rate will decrease if:

Answer 5

Expected inflation increases

Question 6

Merchandise trade deficit:

Answer 6

Foreign investors see opportunities in US Net export

Question 7

Physical capital:

Answer 7

The stock of equipment and building that used to produce goods and service

Question 8

Reserve ratio is 10% bank receives new checkable deposit of $2000

Answer 8

Will be able to make loans up to a max $2000

Question 9

Reserve ratio is 10% and a bank receive a new checkable deposit 1,000

Answer 9

Require to increase by 100

1000*.10 = 100

Question 10

Real wages are equal to:

Answer 10

Nominal wage divided by a price index

Question 11

Which of the following is an example of active fiscal policy?

Answer 11

Congress passes a tax cut after the beginning of a recession with the aim of stimulating the economy.

Question 12

Negative net exports means that:

Answer 12

The country buys more goods from other countries than it sells to other countries.

Question 13

Which of the following is not an example of an automatic stabilizer?

Answer 13

the reduction in income tax revenues during a recession

Question 14

To decrease the money supply, the Fed would

Answer 14

Increase the discount rate.

Question 15

The aggregate supply-aggregate demand model predicts that an unexpected increase in government spending will have what short-run effects?

Answer 15

An increase in both the price level and real output.

Question 16

Which of the following would be included in Gross National Product (GNP) but not in Gross Domestic Product (GDP) of the United States?

Answer 16

the earnings of an American-owned factory in Germany

Question 17

In economics, “National Saving” is calculated by:

Answer 17

Subtracting private and government consumption from total income.

Question 18

Which of the following is NOT one of the components of aggregate demand?

Answer 18

Money supply.

Question 19

In the long-run, higher saving leads to:

Answer 19

Temporarily faster growth.

Question 20

Which of the following statements are correct?

Answer 20

Economists using the classical dichotomy distinguish between variables measured in monetary units from those measured in physical units.

Question 21

The quantity equation relates a measure of the money supply (M), to the velocity of money (V), the GDP deflator (P) and real GDP (Y). Which of the following expression accurately describes the quantity equation?

Answer 21

MV = PY

Question 22

An increase in the minimum wage will likely:

Answer 22

Increase structural unemployment.

Question 23

According to the loanable funds framework, if businesses reduce their willingness to spend money on new capital equipment:

Answer 23

Interest rates will decrease.

Question 24

Governments can increase the likelihood of economic development by:

Answer 24

Supporting smooth transitions from one set of office-holders to another.

Question 25

If there is excess demand in the loan able fund market?

Answer 25

Interest Rates are below equilibrium

Can be expected to rise

Question 26

If there is excess Supply in the loanable funds

Answer 26

Interest Rates are above equilibrium.