maccro 5

A contractionary monetary policy combined with an expansionary fiscal policy will

have uncertain effects on the interest rate and investment

Which of the following will happen if a country's government reduces business taxes?

The short-run aggregate supply curve will shift to the right.

Assume the banking system has limited reserves and the economy is currently in long-run equilibrium. An increase in the money supply will affect unemployment in the short run and in the long run in which of the following ways?

Unemployment will decrease below the natural rate of unemployment in the short run and increase back to the natural rate of unemployment in the long run.

If an economy is in long-run equilibrium, which of the following combinations of policy actions will necessarily result in inflation in the short run?

Buying government bonds on the open market and decreasing government spending

Which of the following is a cause of hyperinflation?

Rapid growth of the money supply

Given the situation illustrated in the graph and holding all other influences constant, which of the following policies will restore the macroeconomic equilibrium to full employment?

An expansionary fiscal policy and an expansionary monetary policy

Increased spending on which of the following contributes most to long-term economic growth?

Education and infrastructure

Assume the economy is initially in long-run equilibrium. Which of the following describes how the short-run effect of an increase in personal income taxes would be depicted in the Phillips curve model provided?

A shift from SRPC2 to SRPC3

Using the graph provided of the long-run Phillips curve (LRPC), which of the following could cause the change from LRP C, to LRPC2?

A decrease in unemployment insurance benefits

Which of the following policy actions could the country's government take to achieve potential output (Yp)?

Increasing government expenditures

Which of the following is true of the Phillips curve?

Itis downward sloping in the short run, but is vertical in the long run.

If nominal gross domestic product in a country is $1,600 and the money supply is $400, what is the velocity of money?

4

Which of the following could cause a movement along a country's short-run Phillips curve toward higher unemployment and lower inflation?

A recession in the economies of the nation's major trading partners

The United States national debt is

the amount of money owed to holders of United States government securities

Which of the following is true about the Phillips curve?

A change in aggregate demand does not shift the long-run Phillips curve (LRPC).

Assume a country's government increases taxes and its central bank increases its administered interest rates. The actions will result in an increase in which of the following in the short run?

unemployment

An increase in the money supply would lead to which of the following in the long run?

An increase in the aggregate price level

An economy is in long-run equilibrium. If the central bank reduces the growth rate of the money supply, which of the following must occur in the long run?

The rate of inflation will decrease.

A country's infrastructure refers to its

public capital goods such as highways

Changes in which of the following factors would affect the growth of an economy?

1. Quantity and quality of human and natural resources

II. Amount of capital goods available

IlI. Technology

1, Il, and III

Which of the following combinations of fiscal and monetary policies will correct a severe recession?

Decreasing income tax rates and decreasing administered interest rates

If a contractionary fiscal policy is followed by an expansionary monetary policy, nominal interest rate and employment would most likely be affected in which of the following ways in the short run?

Nominal Interest Rate Decrease

Employment Indeterminate

Which of the following monetary and fiscal policy mixes will reduce unemployment?

Decreasing interest on reserves and decreasing taxes

The national debt is equal to which of the following?

The sum of all past government budget deficits and surpluses

An advance in technology will cause the

long-run aggregate supply curve to shift to the right

Based on the table above, which of the following is most likely true?

The government is borrowing.

An increase in government spending financed by increased borrowing will most likely change the real interest rate and the gross private domestic investment in which of the following ways?

Real Interest Rate

Increase

Gross Private Domestic Investment

Decrease

Assume that the country of Alpha has a balanced budget. If the government and central bank of Alpha implement expansionary fiscal and monetary policies in order to address a recession, what effect would these policies have in the short run on the government budget and interest rates?

c

According to the short-run Phillips Curve, there is a trade off between

inflation and unemployment

If the money supply is $40,000, consumer spending is $30,000, and nominal output is $50,000, what is the velocity of money according to the quantity theory of money?

1.25

Which of the following policy changes will most likely shift the long-run aggregate supply curve to the right?

An increase in government spending on public education

Given the aggregate demand and aggregate supply curves shown above, if policy makers want to increase real output without causing inflation, they can pursue a policy that will

increase aggregate supply only

Crowding out refers to the decrease in

private investment due to increased borrowing by the government

Economic growth is best measured by a sustained increase in which of the following?

Per capita real gross domestic product

If both contractionary monetary policy and contractionary fiscal policy are carried out, what will most likely happen to interest rates and real gross domestic product (GDP) in the short run?

Interest rates will increase, and real GDP will decrease.

Economic growth is best defined as

a sustained increase in real gross domestic product per capita

Which of the following is true of the long-run Phillips

It is vertical at the natural rate of unemployment.

An increase in which of the following is consistent with an outward shift of the production possibilities curve?

Long-run aggregate supply

According to the short-run Phillips curve, a contractionary fiscal policy will result in

a decrease in inflation and an increase in unemployment

If the government implements an expansionary fiscal policy, what action can the central bank take to maintain a stable interest rate, assuming the banking system has limited reserves?

Buy government bonds

An increase in which of the following is most likely to increase the long-run growth rate of an economy's real per capita income?

The educational attainment of the population

An increase in which of the following is most likely to increase the long-run growth rate of an economy's real per capita income?

The educational attainment of the population

done

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