Macro Final Exam

1. 1Most economists believe that classical theory describes the world in the long run but not in the short run.

   1. AVerdadero
   2. BFalso
2. 2In the model of aggregate demand and aggregate supply, the GDP deflator measures the

   1. ANominal interest Rate
   2. BAverage price level
   3. CAmount of real output
   4. DPrice of oil
3. 3Suppose the economy is in long-run equilibrium. If the government decreases its expenditures, eventually the decrease in aggregate demand causes price expectations to

   1. Afall. This fall in price expectations shifts the short-run aggregate-supply curve to the right
   2. Bfall. This fall in price expectations shifts the short-run aggregate-supply curve to the left
   3. Crise. This rise in price expectations shifts the short-run aggregate-supply to the left
   4. Drise. This rise in price expectations shifts the short-run aggregate-supply curve to the right.
4. 4If not all prices adjust instantly to changing economic circumstances, an unexpected fall in the price level leaves some firms with higher-than-desired prices, and these higher-than-desired prices depress sales and induce firms to ________ the quantity of goods and services they produce

   1. Areduce
   2. Bincrease substantially
   3. Cmake no changes to
   4. Dincrease slightly
5. 5Other things the same, a government regulation that prevents using a current technology raises the price level.

   1. AVerdadero
   2. BFalso
6. 6Unemployment

   1. Afalls when households save a larger fraction of their income
   2. Braises during expansions
   3. Cmoves the opposite direction as real GDP
   4. Ddecreases as production falls
7. 7If aggregate demand and aggregate supply both shift left, we can be sure that the price level is higher in the short run.

   1. AVerdadero
   2. BFalso
8. 8If the price level rises, the real value of a dollar

   1. Afalls, so people will want to buy less
   2. Bfalls, so people will want to buy more
   3. Crises, so people will want to buy less
   4. Drises, so people will want to buy more
9. 9Refer to the figure. The shift of the short-run aggregate-supply curve from SRAS1 to SRAS2

   

   1. Acould be caused by an increase in the expected price level
   2. Bcauses the economy to experience stagflation
   3. Ccauses the economy to experience a decrease in the unemployment rate
   4. Dcould be caused by an outbreak of war in the Middle East
10. 10According to the classical macroeconomic theory, the price level, but not real GDP, are affected by changes in the

    1. Asupply schedule
    2. Blabor supply
    3. Caggregate supply
    4. Dmoney supply

11. 11The quantity of goods and services that firms produce and sell at each price level is shown on the

    1. Aaggregate-demand curve
    2. Bmarket-supply curve
    3. Caggregate-supply curve
    4. Daggregate-services curve
12. 12A decrease in the price level makes consumers feel wealthier, so they purchase more. This logic helps explain why the aggregate-demand curve

    1. Ais vertical
    2. Bis horizontal
    3. Cslopes downward
    4. Dslopes upward
13. 13Tax increases shift aggregate-demand curve to:

    1. Aright while increases in government spending shift aggregate demand left
    2. Bleft while increases in government spending shift aggregate demand right
    3. Cleft as do increases in government spending
    4. Dright as do increases in government spending
14. 14Most economists believe that money neutrality holds in

    1. Athe long run
    2. Bboth the short run and the long run
    3. Cneither the short run nor the long run
    4. Dthe short run
15. 15Recessions occur at ____intervals and are_____ to predict with much accuracy

    1. Aregular; quite possible
    2. Birregular; almost impossibe
    3. Cregular; almost impossible
    4. Dirregular; quite possible
16. 16The sticky-wage theory of the short-run aggregate-supply curve says that when the price level is higher than expected,

    1. Arelative to prices, wages are higher and employment falls
    2. Brelative to prices, wages are lower and employment rises
    3. Crelative to prices, wages are lower and employment falls
    4. Drelative to prices, wages are higher and employment rises
17. 17An increase in natural resources would ____

    1. Aincrease long-run aggregate supply
    2. Bdecrease long-run aggregate supply
    3. Chave no impact on long-run aggregate supply
    4. Dincrease aggregate demand
18. 18Real GDP is most commonly used to monitor short-run changes in

    1. Aeconomic activity
    2. Bincome distribution over time
    3. Cthe rate at which a person can trade the currency of one country for the currency of another
    4. Dthe price index from the preceding period
19. 19Suppose a change in the stock market makes people feel wealthier, increases consumption, and shifts the aggregate-demand curve right. The change in the stock market must have been

    1. Aan increase in stock prices
    2. Bthe stock market has no effect on wealth and consumptions
    3. Cno change in stock prices
    4. Da decrease in stock prices
20. 20Because the price level does not affect the long-run determinants of real GDP, the long-run aggregate-supply curve is upward-sloping

    1. AVerdadero
    2. BFalso
21. 21Suppose that there is a decrease in the costs of production that shifts the short-run aggregate-supply curve right. If there is no policy response, then eventually

    1. Abecause unemployment is low, wages will be bid up and short-run aggregate-supply curve will shift right.
    2. Bbecause unemployment is high, wages will be bid down and short-run aggregate-supply curve will shift right.
    3. Cbecause unemployment is high, wages will be bid up and short-run aggregate-supply curve will shift right.
    4. Dbecause unemployment is low, wages will be bid up and short-run aggregate-supply curve will shift left
22. 22A vertical long-run aggregate-supply curve represents

    1. Athe classical dichotomy but not monetary neutrality
    2. Bboth the classical dichotomy and monetary neutrality
    3. Cneither the classical dichotomy nor monetary neutrality
    4. Dmonetary neutrality but not the classical dichotomy
23. 23People will want to buy fewer bonds and the interest rate will rise, as the price level

    1. Afalls by less than 50 %
    2. Bremains constant
    3. Cfalls by more than 50 %
    4. Drises
24. 24The long-run effect of a decrease in household consumption is to lower

    1. Aboth real output and the price level
    2. Bthe real output and leave the price level unchanged
    3. Cthe price level and leave real output unchanged
    4. Dreal output and rise the price level
25. 25The misperceptions theory of the short-run aggregate supply curve says that the quantity of output supplied will decrease if the price level

    1. Aincreases by less than expected so that firms believe the relative price of their output has increased
    2. Bincreases by less than expected so that firms believe the relative price of their output has decreased.
    3. Cincreases by more than expected so that firms believe the relative price of their output has increased.
    4. Dincreases by more than expected so that firms believe the relative price of their output has decreased.
26. 26According to the classical model, both prices and nominal income would double if the quantity of money

    1. Adoubled
    2. Bremained constant
    3. Ctripled
    4. Dhalved
27. 27People hold less money and lend more and the interest rate falls when the price level

    1. Aremains constant
    2. Bincreases by less than 30%
    3. Cincreases by more than 30%
    4. Ddecreases
28. 28How does the aggregate-demand curve shift when increased uncertainty and pessimism about the future of the economy lead firms to desire less investment spending which shifts the aggregate-demand curve to the left?

    1. AThe curve shifts to the right
    2. BThe curve first shifts to the right and then shifts to the left
    3. CThe curve does not shift at all
    4. DThe curve shifts to the left
29. 29The recessions associated with the business cycle come at irregular intervals

    1. AVerdadero
    2. BFalso
30. 30If the interest rate rises and the supply of dollars in the market for foreign currency exchange shifts left, then the price must have

    1. Aremained constant
    2. Brisen
    3. Cdropped by less than 10 %
    4. Ddropped by more than 90%
31. 31When output rises, unemployment also rises

    1. AVerdadero
    2. BFalso
32. 32An upward-sloping short-run aggregate-supply curve is represented by which of the following equations?

    1. AQuantity of output supplied = Natural level of output - a(Actual price level - Expected price level)
    2. BQuantity of output supplied = Natural level of output + a(Actual price level + Expected price level)
    3. CQuantity of output supplied = a(Natural level of output) + (Actual price level - Expected price level)
    4. DQuantity of output supplied = Natural level of output + a(Actual price level - Expected price level)
33. 33Because some economists do not understand what things change GDP, they cannot predict recessions with a fair amount of accuracy

    1. AVerdadero
    2. BFalso
34. 34Imagine a hypothetical world in which, over the last fifty years, both real GDP and prices have trended downward in most countries. Continuing falls in the level of real GDP and the price level can be explained by

    1. Acontinuing losses in technological abilities alone
    2. Bneither technological ability nor changes in the money supply can explain continuing falls in the level of real GDP contraction and the price level
    3. Ccontinuing losses in technological ability and continuing decreases in the money supply
    4. Dcontinuing decreases in the money supply along
35. 35During a recession, unemployment typically

    1. Arises
    2. Bfalls substantially
    3. Cfalls slightly
    4. Ddoes not change
36. 36A change in weather could ____

    1. Ashift the long-run aggregate-supply curve
    2. Bcause a left to right movement along the long-run aggregate-supply curve
    3. CCause a right to left movement along the long-run aggregate-supply curve
    4. Dnot change the long-run aggregate-supply curve
37. 37An increase in the availability of an importat major resource such as oil shifts the:

    1. Aaggregate-supply curve to the right
    2. Baggregate-demand curve to the right
    3. Caggregate-supply curve to the left
    4. Daggregate-demand curve to the left
38. 38Most macroeconomic variables measure some type of income, spending or production fluxuation very separately from each other

    1. AVerdadero
    2. BFalso
39. 39Below are pairs of GDP growth rates and unemployment rates. Economists would not be shocked to see most of these pairs in the U.S. Which pair of GDP growth rates and unemployment rates is not realistic?

    1. A-2%; 2%
    2. B3%; 6%
    3. C10%; 5%
    4. D-1%; 8%
40. 40Suppose a change in the stock market makes people feel wealthier, increases consumption, and shifts the aggregate-demand curve right. The change in the stock market must have been

    1. Aa decrease in stock prices
    2. Bthe stock market has no effect on wealth and consumpton
    3. Can increase in stock prices
    4. Dno change in stock prices
41. 41What causes the economy to move from its short-run equilibrium to its long-run equilibrium?

    1. AThe government increases spending to increase aggregate demand
    2. BThe government increases taxes to curb aggregate demand
    3. CNominal wages, prices, and perceptions adjust downward to this new price level
    4. DNominal wages, prices, and perceptions adjust upward to this new price level
42. 42Which of the following is true according to the sticky-wage theory of aggregate supply as a result of the decrease in the money supply? Check all that apply.

    1. ANominal wages at the initial equilibrium are equal to nominal wages at the new short-run equilibrium.
    2. BNominal wages at the initial equilibrium are less than nominal wages at the new long-run equilibrium.
    3. CReal wages at the initial equilibrium are equal to real wages at the new short-run equilibrium.
    4. DReal wages at the initial equilibrium are equal to real wages at the new long-run equilibrium.
43. 43Judging by the impact of the money supply on nominal and real wages, this analysis [blank_start]is[blank_end] consistent with the proposition that money has real effects in the short run but is neutral in the long run.

    1. Ais
    2. Bis not
44. 44If firms adjusted their prices every day, then the short-run aggregate-supply curve would be horizontal.

    1. AVerdadero
    2. BFalso
45. 45According to the sticky-wage theory, the economy is in a recession because the price level has declined so that real wages are too [blank_start]high.[blank_end]

    1. Ahigh.
    2. Blow.
46. 46According to the sticky-price theory, the economy is in a recession because not all prices adjust quickly.

    1. AVerdadero
    2. BFalso
47. 47According to the misperceptions theory, the economy is in a recession when suppliers mistakenly believe that the relative price of their goods has [blank_start]fallen.[blank_end]

    1. Afallen.
    2. Brisen.
48. 48The economy begins in long-run equilibrium. Then one day, the president appoints a new chair of the Federal Reserve. This new chair is well known for her view that inflation is not a major problem for an economy.
    
    Which of the following statements accurately describes what would happen as a result of the news?

    1. APeople would expect the price level to rise
    2. BThe nominal wage that workers and firms agree to in their new labor contracts would be lower than it would be otherwise
    3. CThe profitability of producing goods and services at any given price level would increase
    4. DThe short-run aggregate-supply curve would shift to the left.
49. 49**If there is a decline in short-run aggregate supply**
    
    If aggregate demand is held constant, the shift in the aggregate-supply curve will cause the price level to [blank_start]rise[blank_end] and the quantity of output produced to [blank_start]fall.[blank_end]

    1. Arise
    2. Bfall
    3. Cfall.
    4. Drise.

Descripción

Chapters 20-

Autor

Abigail Krause

Idioma

English

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