1) Modern mainstream macroeconomists agree with the monetarists that:
a) the Fed should increase the money supply at a fixed annual rate.
b) velocity is highly stable.
c) fiscal policy is largely ineffective.
d) "money matters" in the macroeconomy.
2) The velocity of money is the:
a) relationship between the money supply and the price level.
b) number of times per year the average dollar is spent on final goods and services.
c) relationship between asset and transactions demands for money.
d) price level divided by aggregate supply.
3) When most consumers and firms reduce spending only because they expect other consumers and firms to reduce spending, and a recession results:
a self-correction has occurred.
an adverse aggregate supply shock has occurred.
a coordination failure has occurred.
a real-business-downturn has occurred.
4) (Last Word) Suppose that real GDP falls to 2 percent below potential GDP. Then, according to the Taylor rule, the Fed should reduce the Federal funds, relative to the current rate of inflation, by:
1/2 percentage point.
1 percentage point.
2 percentage points.
4 percentage points.
5) Critics of supply-side economics:
argue that a tax cut will increase aggregate supply by more than it increases aggregate demand.
contend that the relationship between tax rates and economic incentives is small and of uncertain direction.
believe that a decline in tax rates will increase tax revenues.
point out that tax cuts enable households to substitute work for leisure.
1) Modern mainstream macroeconomists agree with the monetarists that:
a) the Fed should increase the money supply at a fixed annual rate.
b) velocity is highly stable.
c) fiscal policy is largely ineffective.
d) "money matters" in the macroeconomy.
2) The velocity of money is the:
a) relationship between the money supply and the price level.
b) number of times per year the average dollar is spent on final goods and services.
c) relationship between asset and transactions demands for money.
d) price level divided by aggregate supply.
3) When most consumers and firms reduce spending only because they expect other consumers and firms to reduce spending, and a recession results:
a self-correction has occurred.
an adverse aggregate supply shock has occurred.
a coordination failure has occurred.
a real-business-downturn has occurred.
4) (Last Word) Suppose that real GDP falls to 2 percent below potential GDP. Then, according to the Taylor rule, the Fed should reduce the Federal funds, relative to the current rate of inflation, by:
1/2 percentage point.
1 percentage point.
2 percentage points.
4 percentage points.
5) Critics of supply-side economics:
argue that a tax cut will increase aggregate supply by more than it increases aggregate demand.
contend that the relationship between tax rates and economic incentives is small and of uncertain direction.
believe that a decline in tax rates will increase tax revenues.
point out that tax cuts enable households to substitute work for leisure.
Related textbook solutions
Related questions
| 1. | In the money market, money supply is determined by the central bank, such as the Fed in the U.S. Because of this, money supply curve is usually vertical in the short run, while the money demand curve is downward sloping. The quantity demanded of money has an inverse relationship with the interest rate, but a direct relationship with both the price level and real GDP. Therefore, when the general price level increases, what will most likely happen? | ||||||||||||||||
| |||||||||||||||||
| 3. | Suppose workers become pessimistic about their future employment, which causes them to save more and spend less. If the economy is in the Keynesian range of the aggregate supply curve, then | ||||||||||||||||
| |||||||||||||||||
| 5. | Which of the following will shift the aggregate demand curve to the left? | ||||||||||||||||
| |||||||||||||||||
| 6. | Which of the following will shift the aggregate supply curve to the left? | ||||||||||||||||
| |||||||||||||||||
| 8. | There are also two kinds of deflation, the demand-pull deflation and cost-push deflation. Then which of the following is most likely to be true? | ||||||||||||||||
| |||||||||||||||||
| 9. | The short-run aggregate supply curve (SRAS) can be written as follows: Y = Yf + b (p - pe), where Y = real GDP, Yf = full-employment real GDP, p = price level, pe = expected price level, and b is a positive coefficient. The SRAS can be re-written as p = pe - (1/b)(Yf) + (1/b)(Y). Then which of the following is true? | ||||||||||||||||
| |||||||||||||||||
