Question 1

As your income increases over time,your MPC:

Accepted Answer

A)  will not remain constant.
B)  will decrease.
C)  will increase.
D)  can remain constant or can change.E) C) and D)
F) A) and D)

Question 2

The horizontal segment of the aggregate supply curve:

Accepted Answer

A)  shows that real GDP can increase only by affecting the economy's price level.
B)  shows that real GDP can increase without affecting the economy's price level.
C)  depicts a positive relationship between real GDP and the price level.
D)  depicts a negative relationship between real GDP and the price level.
E)  marks the full-employment level of real GDP.F) B) and E)
G) All of the above

Question 3

When OPEC caused the price of oil to rise in the early 1970s,the:

Accepted Answer

A)  aggregate supply curve shifted to the right.
B)  aggregate supply curve shifted to the left.
C)  aggregate demand curve shifted to the right.
D)  aggregate demand curve shifted to the left.
E)  price level in the economy fell.F) B) and E)
G) A) and E)

Question 4

If the terms of trade increase then,ceteris paribus:

Accepted Answer

A)  imports will fall.
B)  imports will rise.
C)  exports will rise.
D)  exports will fall.E) B) and C)
F) A) and C)

Question 5

When the aggregate demand curve shifts to the right,intersecting the aggregate supply curve on its upward-sloping or vertical segment:

Accepted Answer

A)  demand-pull inflation occurs.
B)  cost-push inflation occurs.
C)  stagflation occurs.
D)  deflation occurs.
E)  the shift pulls the price level down.F) A) and B)
G) A) and C)

Question 6

Stagflation occurs when the economy experiences:

Accepted Answer

A)  low unemployment and low inflation.
B)  high unemployment and rapid inflation.
C)  low unemployment and rapid inflation.
D)  high unemployment and low inflation.E) A) and C)
F) B) and C)

Question 7

Stagflation occurs when an economy experiences the high unemployment and low prices simultaneously.

Accepted Answer

A) True 
 B)False

Question 8

When the economy is operating well below capacity,an increase in spending tends to be reflected primarily in a/an:

Accepted Answer

A)  lower level of employment.
B)  increase in price.
C)  lower level of output.
D)  higher level of output and employment.
E)  increase in business failures.F) A) and B)
G) B) and E)

Question 9

Classical economics argued that:

Accepted Answer

A)  the supply curve should remain vertical in the long run.
B)  the First World War was fought to free Britain from economic ruin.
C)  depression was only a short-run, temporary departure from full-employment equilibrium.
D)  funeral plots need to be determined by the market.
E)  market-based realities cause estate taxes to be too high.F) B) and D)
G) A) and E)

Question 10

The idea that government spending can be used to influence demand in an economy was first put forward by:

Accepted Answer

A)  Adam Smith.
B)  John Howard.
C)  Peter Costello.
D)  John Maynard Keynes.
E)  David Ricardo.F) B) and C)
G) D) and E)

Question 11

The classical economists believe that prices and wages quickly adjust to keep the economy operating at full employment.

Accepted Answer

A) True 
 B)False

Question 12

According to the net-exports effect,as the price level falls relative to the rest of the world:

Accepted Answer

A)  foreigners buy fewer goods.
B)  foreigners buy more Australian goods.
C)  the aggregate demand curve shifts to the left.
D)  the aggregate demand curve shifts to the right.
E)  the supply of Australian-made goods increases.F) B) and E)
G) A) and E)

Question 13

Along the intermediate range of the aggregate supply curve the price level and the level of GDP changes as an economy approaches full employment.

Accepted Answer

A) True 
 B)False

Question 14

The aggregate demand curve is downward sloping because:

Accepted Answer

A)  an increase in the price level will cause an increase in spending.
B)  at lower price levels, real wealth decreases, causing a decrease in the quantities of goods and services demanded.
C)  at lower price levels, interest rates decrease, causing a decrease in the quantities of goods and services demanded.
D)  at lower price levels, exports increase, causing an increase in the quantities of goods and services demanded.
E)  increases in the price level do not affect people's real wealth.F) A) and B)
G) All of the above

Exam 14: A simple model of the macro economy

When the economy is operating well below capacity,an increase in spending tends to be reflected primarily in a/an:

Correct Answer
verified

The idea that government spending can be used to influence demand in an economy was first put forward by:

Correct Answer
verified

When OPEC caused the price of oil to rise in the early 1970s,the:

Correct Answer
verified

Stagflation occurs when the economy experiences:

Correct Answer
verified

Classical economics argued that:

Correct Answer
verified

Along the intermediate range of the aggregate supply curve the price level and the level of GDP changes as an economy approaches full employment.

Correct Answer
verified

The aggregate demand curve is downward sloping because:

Correct Answer
verified

The horizontal segment of the aggregate supply curve:

Correct Answer
verified

The classical economists believe that prices and wages quickly adjust to keep the economy operating at full employment.

Correct Answer
verified

If the terms of trade increase then,ceteris paribus:

Correct Answer
verified

According to the net-exports effect,as the price level falls relative to the rest of the world:

Correct Answer
verified

Stagflation occurs when an economy experiences the high unemployment and low prices simultaneously.

Correct Answer
verified

When the aggregate demand curve shifts to the right,intersecting the aggregate supply curve on its upward-sloping or vertical segment:

Correct Answer
verified

As your income increases over time,your MPC:

Correct Answer
verified

Exam 14: A simple model of the macro economy

When the economy is operating well below capacity,an increase in spending tends to be reflected primarily in a/an:

Correct AnswerverifiedShow Answer

The idea that government spending can be used to influence demand in an economy was first put forward by:

Correct AnswerverifiedShow Answer

When OPEC caused the price of oil to rise in the early 1970s,the:

Correct AnswerverifiedShow Answer

Stagflation occurs when the economy experiences:

Correct AnswerverifiedShow Answer

Classical economics argued that:

Correct AnswerverifiedShow Answer

Along the intermediate range of the aggregate supply curve the price level and the level of GDP changes as an economy approaches full employment.

Correct AnswerverifiedShow Answer

The aggregate demand curve is downward sloping because:

Correct AnswerverifiedShow Answer

The horizontal segment of the aggregate supply curve:

Correct AnswerverifiedShow Answer

The classical economists believe that prices and wages quickly adjust to keep the economy operating at full employment.

Correct AnswerverifiedShow Answer

If the terms of trade increase then,ceteris paribus:

Correct AnswerverifiedShow Answer

According to the net-exports effect,as the price level falls relative to the rest of the world:

Correct AnswerverifiedShow Answer

Stagflation occurs when an economy experiences the high unemployment and low prices simultaneously.

Correct AnswerverifiedShow Answer

When the aggregate demand curve shifts to the right,intersecting the aggregate supply curve on its upward-sloping or vertical segment:

Correct AnswerverifiedShow Answer

As your income increases over time,your MPC:

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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