Download Macroeconomics Final Study Guide

1.
Question: Macroeconomics deals with:
Your
bits and pieces of the economy.
Answer:
the question of how a business unit should operate
profitably.
the working of the entire economy or large sectors of
it.
how individuals make decisions.
CORRECT
Points 3 of 3
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Comments:
2.
Question: If the state government allocates additional spending on education, the
opportunity cost is:
Your
zero.
Answer:
the dollar amount of the additional spending.
only considered if additional taxes need to be raised to
fund the spending.
measured in terms of the alternative uses for that
CORRECT
money.
Points 3 of 3
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Comments:
3.
Question: The concept of the margin deals with:
Your
making incremental choices.
Answer:
one more or one less of something.
doing a little more or a little less.
all of the above.
CORRECT
Points 3 of 3
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Comments:
4.
Question: Which of the following principles underlie the economics of individual
choices?
Your
There are gains from trade.
Answer:
Markets move toward equilibrium.
People usually exploit opportunities to make
CORRECT
themselves better off.
Resources should be used as efficiently as possible to
achieve society's goals.
Points 3 of 3
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5.
Question: Increases in total output realized when individuals specialize in particular tasks
and trade are known as:
Your
CORRECT
the gains from trade.
Answer:
the profits obtained from sales of a good or service.
marginal analysis.
a tradeoff.
Points 3 of 3
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Comments:
6.
Question: If equilibrium exists:
Your
all individuals must have an equal amount of income.
Answer:
the price in that market will not fluctuate by more than
5%.
there will be no remaining opportunities for
individuals to make themselves better off.
the number of buyers equals the number of sellers.
CORRECT
Points 3 of 3
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Comments:
7.
Question: Economists believe that resources should be used as efficiently as possible to:
Your
achieve society's goals. CORRECT ANSWER
Answer:
eliminate scarcity.
reduce inequity.
do all of the above.
INCORRECT
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8.
Question: When markets fail:
Your
government intervention may help.
Answer:
the market realizes the maximum possible gains from
trade given the available resources.
there may still be an efficient allocation of resources.
no goods and services are produced.
Points 3 of 3
Received:
CORRECT
9.
Comments:
Question: When moving along a production possibilities curve, the opportunity cost to
society of getting more of one good:
Your
is constant.
Answer:
is measured in dollar terms.
is measured by the amount of the other good that
CORRECT
must be given up.
usually decreases.
Points 3 of 3
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Comments:
10.
Question: The fact that a society's production possibilities curve is bowed out or concave
to the origin of a graph demonstrates the law of:
Your
increasing opportunity cost. CORRECT
Answer:
decreasing opportunity cost.
constant opportunity cost.
concave opportunity cost.
Points 3 of 3
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11.
Question: If an economy is producing a level of output that is on its production
possibilities curve, the economy:
Your
has idle resources.
Answer:
has idle resources but is using resources efficiently.
has no idle resources but is using resources
inefficiently.
has no idle resources and is using resources
CORRECT
efficiently.
Points 3 of 3
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Comments:
12.
Question: Technological improvements will:
Your
leave the production possibilities curve unchanged.
Answer:
shift the production possibilities curve inward.
shift the production possibilities curve outward.
necessarily lead to increased unemployment.
Points 3 of 3
CORRECT
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Comments:
13.
Question: An economy that has the lowest opportunity cost for producing a particular
good is said to have a(n):
Your
absolute advantage.
Answer:
CORRECT ANSWER
comparative advantage.
production possibilities curve.
increasing opportunity cost.
INCORRECT
Points 0 of 3
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14.
Question: The concept of comparative advantage is based upon:
Your
absolute labor productivity.
Answer:
relative labor costs.
dollar prices of labor.
relative opportunity costs. CORRECT
Points 3 of 3
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15.
Question: An economy is said to have a comparative advantage in the production of a
good if it can produce that good:
Your
with more resources than another economy.
Answer:
with a higher opportunity cost than another economy.
outside its production possibilities curve.
at a lower opportunity cost than another economy. CORRECT
Points 3 of 3
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16.
Question: An example of a positive statement is:
Your
The rate of unemployment is 4 percent.
Answer:
A high rate of economic growth is good for the country.
Everyone in the country needs to be covered by national
health insurance.
Baseball players should not be paid higher salaries than
the president of the United States.
Points 3 of 3
Received:
CORRECT
17.
Comments:
Question: The primary difference between a change in demand and a change in the
quantity demanded is:
Your
a change in demand is a movement along the demand
Answer:
curve and a change in quantity demanded is a shift in
the demand curve.
a change in quantity demanded is a movement along
the demand curve and a change in demand is a shift CORRECT
in the demand curve.
both a change in quantity demanded and a change in
demand are shifts in the demand curve, only in different
directions.
both a change in quantity demanded and a change in
demand are movements along the demand curve, only
in different directions.
Points 3 of 3
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18.
Question: If people demand more of product A when the price of B falls, then A and B
are:
Your
not related.
Answer:
substitutes.
complements. CORRECT
inferior.
Points 3 of 3
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19.
Question: Given that chicken and beef are substitute goods, if the price of chicken
decreases substantially, there would be:
Your
an increase in the demand for beef.
Answer:
CORRECT
a decrease in the demand for beef.
a decrease in the quantity of beef demanded.
no change in the demand for beef.
Points 3 of 3
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20.
Question: For most goods, purchases tend to rise with increases in buyers' incomes and to
fall with decreases in buyers' incomes. Such goods are known as:
Your
inferior goods.
Answer:
direct goods.
normal goods. CORRECT
indirect goods.
Points 3 of 3
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21.
Question: A decrease in supply means:
Your
CORRECT
a
shift
to
the
left
of
the
entire
supply
curve.
Answer:
ANSWER
moving downward (to the left) along the supply
curve with lower prices.
less will be demanded at every price.
INCORRECT
more will be supplied at every price.
Points 0 of 3
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22.
Question: The primary difference between a change in supply and a change in the
quantity supplied is:
Your
a change in quantity supplied is a movement along
Answer:
CORRECT
the supply curve, while a change in supply is a shift
in the supply curve.
both a change in quantity supplied and a change in
supply are movements along the supply curve, only in
different directions.
a change in supply is related to the supply curve, while
a change in quantity supplied is related to shifts in the
demand curve that elicit a change in supply.
a change in supply is a movement along the supply
curve, while a change in quantity supplied is a shift in
the supply curve.
Points 3 of 3
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Comments:
23.
Question: If the quantity of housing supplied in a community is greater than the quantity
of houses demanded, the existing price:
Your
is above the market equilibrium price. CORRECT
Answer:
will rise to clear the market.
will either rise or remain unchanged.
is below the market equilibrium price.
Points 3 of 3
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Comments:
24.
Question: An increase in demand, with no change in supply, will lead to ________ in
equilibrium quantity and ________ in equilibrium price.
Your
an increase; an increase CORRECT
Answer:
an increase; a decrease
a decrease; an increase
a decrease; a decrease
Points 3 of 3
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25.
Question: Suppose that the average cost of a doctor's visit is $100. If the government
imposes a price ceiling of $50 on the cost of a doctor's visit, there will be:
Your
an excess supply of doctor's visits.
Answer:
CORRECT
an excess demand for doctor's visits.
ANSWER
an increase in the equilibrium number of
INCORRECT
doctor's visits.
no change in the number of doctor's visits.
Points 0 of 3
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26.
Question: The government decides to impose a price ceiling on a good, because it thinks
the market determined price is “too high.” If it imposes the price ceiling above
the equilibrium price:
Your
consumers will respond to the higher price and therefore
Answer:
wish to purchase less of the good than at the equilibrium
price.
producers will respond to the higher price and therefore
offer fewer units for sale.
consumers will purchase less of the good after the price
ceiling is imposed.
there will be no change to either the price of quantity
CORRECT
in the market.
Points 3 of 3
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27.
Question: A price ceiling will have no effect if:
Your
Answer:
CORRECT
it is set above the equilibrium price.
the equilibrium price is above the price ceiling.
set below the equilibrium price.
it creates a shortage.
Points 3 of 3
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28.
Question: In a black market, goods or services are bought and sold:
Your
at night.
Answer:
without any information about quality.
without any information about price.
illegally.
CORRECT
Points 3 of 3
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29.
Question: The modern tools of macroeconomic stabilization are ______.
Your
tax policy and government spending policy
Answer:
CORRECT
fiscal policy and monetary policy
monetary policy and exchange rate policy
capital policy and labor policy
Points 3 of 3
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30.
Question: An example of an economic aggregate is ______.
Your
the average salary of a graduate from the
Answer:
Columbia graduate school of business
the federal personal income tax rate for married
individuals
CORRECT
the amount that households, firms, and the
ANSWER
government save in a given year
the value of all cars produced by General Motors
INCORRECT
during a year
Points 0 of 3
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31.
Question: The unemployment rate is ______.
Your
the percent of the labor force that is unemployed
CORRECT
Answer:
the number of people unemployed
the ratio of the labor force to the number of people
unemployed
the average length of time someone is unemployed
Points 3 of 3
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32.
Question: A business cycle is ______.
Your
a very deep and prolonged economic downturn
Answer:
a period in which output and employment are rising
a period in which output and employment are falling
a short-run alternation between economic upturns
and downturns
CORRECT
Points 3 of 3
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33.
Question: The trade balance is the difference between the value of the _______.
Your
trade deficit and the budget deficit
Answer:
goods and services that one country sells to other
countries and the value of the goods and services it
buys in return
exchange rates of two countries that are engaged in
international trade
national debt and the foreign debt
CORRECT
Points 3 of 3
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Comments:
34.
Question: Because capital flows allow some countries to spend more on additions to their
productive capacity than they would have been able without capital flows, in
the long run, they experience ______.
Your
higher interest rates
Answer:
higher inflation
a higher standard of living CORRECT
none of the above
Points 3 of 3
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35.
Question: Which of the following would NOT be considered a government transfer?
Your
Answer:
unemployment compensation
food stamps
payments by the Defense Department for a new
weapons system
Medicare benefits paid to someone who is indigent
CORRECT
Points 3 of 3
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Comments:
36.
Question: Investment spending represents spending on ______.
Your
productive physical capital CORRECT
Answer:
stocks
mutual funds
corporate bonds
Points 3 of 3
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Comments:
37.
Question: The purchases of which of the following goods are included in GDP?
Your
used goods
INCORRECT
Answer:
newly issued stocks
foreign-produced investment goods
capital goods
CORRECT ANSWER
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38.
Question: During a recession ______.
Your
unemployment and the growth rate of real GDP both
Answer:
decrease
unemployment decreases and the growth rate of real
GDP increases
unemployment increases and the growth rate of real
GDP decreases
there is no relationship between unemployment and the
growth rate of real GDP
Points 3 of 3
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39.
Question: Discouraged workers are those individuals ______.
CORRECT
Your
Answer:
who are getting paid too little
who do not like their jobs
who are working part time but are looking for a fulltime job
who have given up looking for a job
CORRECT
Points 3 of 3
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40.
Question: The major difference between the Consumer Price Index and the Producer
Price Index is that ______.
Your
the PPI is based on retail prices and CPI is based on
Answer:
wholesale prices
the PPI measures the cost of living of self-employed
workers and the CPI measures the cost of living of
salaried workers
the PPI generally registers a higher rate of inflation than
the CPI
the PPI is based on the cost of a basket typically
purchased by producers, while the CPI is based on
CORRECT
the cost of a basket typically purchased by
consumers
Points 3 of 3
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41.
Question: The rule of 70 states that ______.
Your
the average score on standardized tests is normally
Answer:
distributed with a mean of 70 and a standard deviation
of 10
everyone should retire by age 70
the number of years for a variable to double equals
70 divided by its annual growth rate
Social Security benefits should increase when people
reach 70
Points 3 of 3
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42.
Question: Long-run economic growth depends almost entirely on ______.
Your
CORRECT
labor productivity growth
Answer:
population growth
agricultural production growth
CORRECT
number of hours worked
Points 3 of 3
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43.
Question: For developed countries, which of the following would be considered the most
important drive in productivity growth?
Your
educational level of attainment
Answer:
the amount of physical capital
technology
CORRECT
the abundance of natural resources
Points 3 of 3
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44.
Question: If technology advances, then ______.
Your
more output can be obtained from the same inputs CORRECT
Answer:
more inputs are needed to produce the same output
less output can be obtained from the same inputs
less can be obtained even with more inputs
Points 3 of 3
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45.
Question: Growth accounting estimates the _____.
Your
increase in the population rate over time
Answer:
increase in the inflation rate over time
contribution of each major factor in the aggregate
production function to economic growth
contribution of the technology factor in the aggregate
production function to economic growth
CORRECT
Points 3 of 3
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46.
Question: According to the text, productivity is driven by all of the following below
EXCEPT ______.
Your
physical capital
Answer:
human capital
technological progress
natural resources
CORRECT
Points 3 of 3
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47.
Question: Sources of funds for investment spending are ______.
Your
savings by households, government, and
Answer:
foreigners
taxes and transfer payments
CORRECT
ANSWER
INCORRECT
always equal to U.S. spending on imports
directed to their most productive uses by the
U.S. government
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48.
Question: The budget balance is equal to ______.
Your
taxes minus government transfers minus
Answer:
government spending
taxes minus government spending
CORRECT
government spending minus taxes
taxes plus government spending minus government
transfers
Points 3 of 3
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49.
Question: Capital inflows represent _______.
Your
the net inflow of funds into a country
Answer:
the net outflow of funds from a country
the amount that domestic savings exceeds foreign
savings
the excess of domestic physical capital exported minus
the amount of physical capital imported
CORRECT
Points 3 of 3
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50.
Question: A business will want to borrow to undertake an investment project when the
rate of return on that project is _______.
Your
less than the interest rate
Answer:
greater than the interest rate CORRECT
greater than the exchange rate
equal to the inflation rate
Points 3 of 3
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51.
Question: The loanable funds market maximizes ______.
Your
the interest rate to savers
Answer:
the rate of return by borrowers
the gains from trade between lenders and borrowers CORRECT
the amount of investment spending in the economy
Points 3 of 3
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52.
Question: In financial markets ______.
Your
households sell liabilities
Answer:
wealth is transformed into savings
households purchase financial assets CORRECT
physical assets exchange hands
Points 3 of 3
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53.
Question: A loan is ______.
Your
a liability for the lender and an asset for the borrower
Answer:
a physical asset that is traded in financial markets
a claim on a bank that obliges the bank to provide funds
to a lender
a liability for the borrower and an asset for the
lender
Points 3 of 3
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Comments:
54.
Question: Among financial intermediaries are ______.
Your
mutual funds
Answer:
pension funds
insurance companies
all of the above
CORRECT
CORRECT
Points 3 of 3
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Comments:
55.
Question: The aggregate supply curve shows the relationship between ______.
Your
the price of oil and the quantity of aggregate output
Answer:
supplied
the aggregate price level and the quantity of
CORRECT
aggregate output supplied
the price of money and the quantity of aggregate output
supplied
the level of employment and the quantity of aggregate
output supplied
Points 3 of 3
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56.
Question: Stagflation is a combination of ______.
Your
increasing unemployment and increasing inflation CORRECT
Answer:
decreasing unemployment and decreasing inflation
increasing unemployment and decreasing inflation
decreasing unemployment and increasing inflation
Points 3 of 3
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57.
Question: The positive relationship between the aggregate price level and aggregate
output supplied gives the short-run aggregate supply curve ______.
Your
an upward slope CORRECT
Answer:
a vertical slope
a horizontal slope
a downward slope
Points 3 of 3
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58.
Question: An increase in the aggregate price level will increase ______.
Your
short-run aggregate supply
Answer:
the quantity of aggregate output supplied in the
short run
aggregate demand
the quantity of aggregate output demanded
CORRECT
Points 3 of 3
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59.
Question: The interest rate effect of an aggregate price level change causes ______.
Your
the long-run aggregate supply curve to be
Answer:
vertical
the aggregate demand curve to be negatively CORRECT
ANSWER
sloped
the short-run aggregate supply curve to be
INCORRECT
positively sloped
the aggregate demand curve to be positively
sloped
Points 0 of 3
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60.
Question: Suppose that the stock market crashes. Which of the following is most likely
to occur?
Your
the aggregate demand curve shifts to the right
Answer:
the aggregate demand curve shifts to the left CORRECT
a movement up the aggregate demand curve
a movement down the aggregate demand curve
Points 3 of 3
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Comments:
61.
Question: The marginal propensity to consume is ______.
Your
increasing if the marginal propensity to save is
Answer:
increasing
the proportion of total disposable income that the
average family consumes
the change in consumer spending divided by the
change in aggregate disposable income
the change in consumer spending less the change in
aggregate disposable income
Points 3 of 3
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Comments:
62.
Question: In the short run, a positive demand shock _____.
Your
reduces aggregate output and increases the
Answer:
aggregate price level
increases aggregate output and reduces the
CORRECT
aggregate price level
reduces aggregate output and the aggregate
INCORRECT
price level
increases aggregate output and the aggregate CORRECT
ANSWER
price level
Points 0 of 3
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63.
Question: Which of the following is a government transfer?
Your
wages paid to U.S. senators
Answer:
purchases of tanks for the army
Social Security payments to retired postal workers
payments to contractors for repairs on interstate
highways
CORRECT
Points 3 of 3
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Comments:
64.
Question: A government might want to increase aggregate demand to ______.
Your
close an inflationary gap
Answer:
CORRECT
close a recessionary gap
lower prices in the economy
lower employment in the economy
Points 3 of 3
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65.
Question: All of the following are examples of fiscal policy EXCEPT ______.
Your
increasing the reimbursement amounts under Medicaid
Answer:
reducing the money supply in order to raise the
interest rate
increasing the personal income tax deductions for home
ownership
reducing federal subsidies to state universities
Points 3 of 3
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Comments:
66.
Question: Time lags suggest that ______.
Your
increases in spending to fight a recessionary gap can be
Answer:
timed correctly
CORRECT
increases in spending to fight a recessionary gay may
occur too early
increases in spending to fight a recessionary gap may
CORRECT
occur too late
none of the above is correct
Points 3 of 3
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Comments:
67.
Question: Government spending and taxation rules that cause fiscal policy to be
expansionary when the economy contracts and contractionary when the
economy expands are known as ______.
Your
discretionary fiscal policy
Answer:
CORRECT
automatic stabilizers
autonomous spending policies
destabilizing fiscal policies
Points 3 of 3
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68.
Question: Expansionary fiscal policies ______.
Your
make the budget surplus smaller CORRECT
Answer:
make the budget deficit smaller
affect only taxes
affect only government spending
Points 3 of 3
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Comments:
69.
Question: Most economists believe that a balanced budget would ______.
Your
undermine the role of taxes and transfers as
Answer:
automatic stabilizers
enhance the effect of automatic stabilizers in the
economy
strengthen the ability of policy makers to conduct
discretionary fiscal policy
not have any impact on the role of taxes and transfers as
automatic stabilizers
Points 3 of 3
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Comments:
CORRECT
70.
Question: Commodity-backed money is ______.
Your
a medium of exchange with some intrinsic
Answer:
value
equivalent to commodity money
a medium of exchange which has alternative
economic uses
none of the above
CORRECT
ANSWER
INCORRECT
Points 0 of 3
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Comments:
71.
Question: Money whose value derives entirely from its official status as a means of
exchange is known as ______.
Your
commodity money
Answer:
commodity-backed money
fiat money
CORRECT
bank reserves
Points 3 of 3
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72.
Question: The existence of banks ______.
Your
results in the money supply being larger than the
Answer:
amount of currency in circulation
inhibits the creation of money
makes the money supply equal to the amount of
currency in circulation
results in the money supply being less than the amount
of currency in circulation
Points 3 of 3
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Comments:
73.
Question: The Fed controls _______.
Your
the discount rate
Answer:
the monetary base
the reserve ratio
all of the above
Points 3 of 3
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Comments:
CORRECT
CORRECT
74.
Question: The three main monetary policy tools are ______.
Your
interest rates, taxes, government purchases, and
Answer:
transfers
currency, near-moneys, and reserve ratio
deposit insurance, discount rate, and money multiplier
reserve requirements, the discount rate, and openmarket purchases
CORRECT
Points 3 of 3
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Comments:
75.
Question: Open-market operations occur when the Fed _______.
Your
buys U.S. Treasury bills from the federal
Answer:
government
buys or sells U.S. Treasury bills
buys or sells existing U.S. Treasury bills
does all of the above
CORRECT
ANSWER
INCORRECT
Points 0 of 3
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Comments:
76.
Question: If the Fed conducts an open-market purchase _______.
Your
bank reserves decrease and the money supply decreases
Answer:
bank reserves increase and the money supply
increases
bank reserves decrease and the money supply increases
CORRECT
bank reserves increase and the money supply decreases
Points 3 of 3
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Comments:
77.
Question: The federal funds rate is the interest rate on ______, and is controlled by the
_______.
Your
loans from the Fed to banks; Federal Open
INCORRECT
Answer:
Market Committee
CORRECT
reserves that banks lend to each other;
ANSWER
Federal Open Market Committee
loans from the Fed to banks; President and
Congress
reserves that banks lend to each other; President
and Congress
Points 0 of 3
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Comments:
78.
Question: The amount of money that people demand is ______.
Your
positively related to the interest rate
Answer:
independent the interest rate
negatively related to the interest rate
INCORRECT
CORRECT
ANSWER
positively related or negatively related to the
interest rate depending on the state of the
economy
Points 0 of 3
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79.
Question: The real quantity of money is the _______.
Your
nominal quantity of money divided by the aggregate
Answer:
price level
aggregate price level divided by the nominal quantity of
money
nominal quantity of money times the aggregate price
level
nominal quantity of money divided by the interest rate
CORRECT
Points 3 of 3
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Comments:
80.
Question: If the Fed wants to decrease interest rates, it can ______.
Your
decrease the money supply by selling Treasury bills
Answer:
decrease the money supply by buying Treasury bills
increase the money supply by selling Treasury bills
increase the money supply by buying Treasury bills CORRECT
Points 3 of 3
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Comments:
81.
Question: The main objective of contractionary monetary policy is to ______.
Your
CORRECT ANSWER
decrease aggregate demand
Answer:
close a recessionary gap
increase investment
raise the level of potential output
INCORRECT
Points 0 of 3
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Comments:
82.
Question: An increase in interest rates will lead to a(n) ______.
Your
decrease in aggregate demand CORRECT ANSWER
Answer:
increase in aggregate demand
increase in aggregate supply
increase in the money supply
INCORRECT
Points 0 of 3
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Comments:
83.
Question: According to the loanable funds model, contractionary monetary policy
_______.
Your
shifts the demand curve for loanable funds to the right
Answer:
shifts the supply curve for loanable funds to the right
shifts the demand curve for loanable funds to the left
shifts the supply curve for loanable funds to the left CORRECT
Points 3 of 3
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Comments:
84.
Question: In the long run, an increase in the quantity of money _______.
Your
increases real output
Answer:
increases prices but not long-run output CORRECT
increases real interest rates
has no impact on the economy
Points 3 of 3
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Comments:
85.
Question: The Humphrey-Hawkins Act of 1978 defined full employment of ____
unemployment.
Your
0%
Answer:
4% CORRECT
5%
10%
Points 3 of 3
Received:
86.
Comments:
Question: To be counted as unemployed, one must ______.
Your
have had a job previously
Answer:
be actively looking for a job
CORRECT
have had a job before and be actively looking for work
be out of work
Points 3 of 3
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Comments:
87.
Question: The labor demand curve is negatively sloped because _______.
Your
more people are willing to work at lower wages than at
Answer:
higher wages
more people are willing to work at higher wages than at
lower wages
employers are willing to hire more people at lower
wages
employers are willing to hire more people at higher
wages
CORRECT
Points 3 of 3
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Comments:
88.
Question: If a worker becomes unemployed due to an increase in the minimum wage, that
worker is ______.
Your
frictionally unemployed
Answer:
structurally unemployed CORRECT
cyclically unemployed
engaged in job search
Points 3 of 3
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Comments:
89.
Question: Generous unemployment benefits are likely to have which of the following
consequences?
Your
an increase in the employment level
Answer:
a reduction in job search time
a decrease in the unemployment rate
an increase in the unemployment rate CORRECT
Points 3 of 3
Received:
Comments:
90.
Question: Which of the following is likely to lead to a large number of discouraged
workers?
Your
when the economy is expanding
Answer:
CORRECT
when the availability of jobs falls
when the economy is experiencing inflation
when the economy is experiencing deflation
Points 3 of 3
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Comments:
91.
Question: Which of the following is NOT one of the explanations for why the labor
market does not move quickly to equilibrium?
Your
CORRECT
Wages fall quickly in the faces of surpluses.
Answer:
ANSWER
Wages are sticky.
Workers are slow to realize that the equilibrium
INCORRECT
wage has changed.
Wages in the labor market behave differently
from the prices of many goods and services.
Points 0 of 3
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Comments:
92.
Question: Wages tend to be stickier when _______.
Your
wages are rising
Answer:
CORRECT
wages are falling
the unemployment rate is low
the economy is growing
Points 3 of 3
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Comments:
93.
Question: Inflation doesn't reduce purchasing power if ______.
Your
price of essential products, such as food and gasoline,
Answer:
don't increase too much
it causes an increase in nominal wages
it remains under 10% per year
the Federal Reserve increases the money supply enough
to offset it
CORRECT
Points 3 of 3
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Comments:
94.
Question: In the short run, an increase in aggregate demand from a position of full
employment leads to ______.
Your
higher prices and higher unemployment
Answer:
CORRECT
higher prices and higher output
lower prices and higher output
lower prices and higher unemployment
Points 3 of 3
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Comments:
95.
Question: The inflation tax is ______.
Your
the increase in the real value of money held by the
Answer:
public caused by inflation
the decrease in the real value of money held by the
public caused by inflation
the result of the indexing wages to inflation
CORRECT
cost of living adjustments, or COLAS
Points 3 of 3
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Comments:
96.
Question: The government debt is monetized when the ______.
Your
Treasury mints new currency in order to buy Treasury
Answer:
bills back
Fed conducts open-market purchases
Fed transfers part of its financial reserves to the
Treasury, who in turn buys Treasury bills back
Fed sells Treasury bills in the bond market
Points 3 of 3
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Comments:
97.
Question: If the expected inflation rate rises, then the ______.
Your
real interest rate rises
INCORRECT
Answer:
real interest rate falls
nominal interest rate falls
nominal interest rate rises CORRECT ANSWER
CORRECT
Points 0 of 3
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Comments:
98.
Question: Shoe leather costs refer to the ______.
Your
effect of inflation on the prices of food, clothes, and
Answer:
other necessities
increased cost of transactions due to inflation
CORRECT
high price of leather goods
effect of inflation on transportation costs
Points 3 of 3
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Comments:
99.
Question: Disinflation means a decrease in _______.
Your
prices
Answer:
the rate of inflation CORRECT
aggregate supply
the money supply
Points 3 of 3
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Comments:
100.
Question: There is a zero bound to which of the following interest rates?
Your
real interest rates
Answer:
nominal interest rates
both real and nominal interest rates
There is no zero bound on either nominal or real interest
rates.
Points 3 of 3
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Comments:
\
CORRECT