ECON 2301 Week 5 Quiz 10

ECON 2301 Week 5 Quiz 10 | Assignment Help | Central Texas College

•             Question 1

                According to the classical model, which of the following would double if the quantity of money doubled?                                            

Answers:             a.

prices but not nominal income

                b.

nominal income but not prices

                 c.

both prices and nominal income

d.

neither prices nor nominal income

•             Question 2

                Aggregate demand shifts right when the Federal Reserve                                           

Answers:             a.

raises personal income taxes.

                 b.

increases the money supply.

                c.

institutes an investment tax credit.

                d.

All of the above are correct.

•             Question 3

                Which of the following is correct?                                            

Answers:             a.

During economic contractions most firms experience rising profits.

                 b.

When real GDP falls, the rate of unemployment generally rises.

                c.

Short run fluctuations in economic activity happen only in developing countries.

                d.

Recessions come at irregular intervals and are easy to predict.

•             Question 4

                An increase in household saving causes consumption to                                               

Answers:             a.

rise and aggregate demand to increase.

                b.

fall and aggregate demand to increase.

                c.

rise and aggregate demand to decrease.

                 d.

fall and aggregate demand to decrease.

•             Question 5

                Which of the following fall during a recession?                                  

Answers:             a.

both retail sales and employment

                b.

retail sales but not employment

                c.

employment but not retail sales

                d.

neither employment nor retail sales

•             Question 6

                A decrease in government spending initially and primarily shifts                                               

Answers:             a.

aggregate demand to the right.

                b.

aggregate supply to the right.

                 c.

aggregate demand to the left.

                d.

neither aggregate demand nor aggregate supply.

•             Question 7

                Using the liquidity-preference model, when the Federal Reserve increases the money supply,                                 

Answers:             a.

the aggregate-demand curve shifts to the left.

                b.

the short-run aggregate-supply curve shifts to the right.

                 c.

the equilibrium interest rate decreases.

                d.

the quantity of goods and services demanded is unchanged for a given price level.

•             Question 8

                An example of an automatic stabilizer is                                               

                Selected Answer:            a.

unemployment benefits.

Answers:             a.

unemployment benefits.

                b.

a lowering of interest rates by the Fed.

                c.

a decrease in tax rates in response to a recession.

                d.

a decrease in money demand.

•             Question 9

                A goal of monetary policy and fiscal policy is to                                  

Answers:             a.

enhance the shifts in aggregate demand and thereby increase economic growth

                 b.

offset shifts in aggregate demand and thereby stabilize the economy.

                c.

enhance the shifts in aggregate demand and thereby create fluctuations in output and employment.

                d.

offset the shifts in aggregate demand and thereby eliminate unemployment.

•             Question 10

                Figure 34-1

Refer to Figure 34-1. At an interest rate of 4 percent, there is an excess                                

Answers:             a.

demand for money equal to the distance between points b and c.

                b.

supply of money equal to the distance between points b and c.

                 c.

supply of money equal to the distance between points a and b.

                d.

demand for money equal to the distance between points a and b.