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22 Cards in this Set
- Front
- Back
Which of the following is always true of aneconomy operating on its production possibilitiesfrontier? |
(A) Its resources are fully employed. |
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Open market operations take place when the |
central bank buys or sells government bonds |
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A rightward shift in the short-run aggregatesupply curve will occur when |
(D) the stock of physical capital increases |
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An increase in which of the following is mostlikely to increase long-run economic growth? |
(E) Money demand |
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Suppose that personal income is $3,500 billion,personal taxes are $1,000 billion, and depreciationis $500 billion. Disposable income is equal towhich of the following? |
(D) $3,000 billion |
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The money demand curve is downward slopingbecause |
(B) people hold less money as the opportunitycost of holding money rises |
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According to the quantity theory of money,the quantity of money is related |
(E) positively to the nominal gross domesticproduct |
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Which of the following would generate cost-pushinflation? |
(A) An increase in the price of labor |
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Assuming no change in the nominal wage and asignificant increase in human capital, the outputper worker will |
B) increase and the real wage will increase |
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Scarcity exists because |
human wants exceed the productive capacityof the economy |
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To counter a recession, the central bank mightpursue which of the following actions? |
(D) Decreasing the discount rate and buyingsecurities on the open market |
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An increase in the price of a key input will causethe aggregate demand curve and the short-runaggregate supply curve to change in which of thefollowing ways |
(D) No change Shift to the left |
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. Suppose that the central bank buys $100 worthof bonds on the open market. Assume that therequired reserve ratio is 10 percent, banks keep noexcess reserves, and there are no cash leakages.After banks have made all adjustments, reserves,demand deposits, and loans will increase bywhich of the following? |
(E) $100 $1,000 $900 |
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A simultaneous increase in both the demand forand the supply of a good in a market will lead towhich of the following changes in the equilibriumprice and quantity of the good? |
(C) Indeterminate Increase |
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Country A both imports and produces tea. IfCountry A imposes a tariff on imported tea, whichof the following will occur? |
(C) Employment in the domestic tea industry willincrease. |
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16. In the United States, which event would havecaused the shift of the money supply curve fromS1 to S2 in the money market shown above? |
(A) The purchase of government bonds on theopen market by the Federal Reserve |
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17. The short-run Phillips curve shows that |
(A) there is a trade-off between inflation andunemployment |
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Real Disposable Income Consumption$18,000 $19,000$22,000 $22,000$26,000 $25,00018. According to the income and consumptionschedules shown above, the marginal propensityto consume is |
(D) 0.75 |
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Which of the following is an example of frictionalunemployment? |
(A) A person quits a job to search for another job |
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In the long run, a decrease in the money supplywill affect the price level and the level of outputin which of the following ways? |
(E) Decrease No change |
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21. If fiscal policy is used to correct a recessionarygap, which of the following would most likelyoccur in the absence of crowding out in theshort run? |
(A) Increase Decrease |
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Given the aggregate demand and aggregate supplycurves shown above, if policy makers want toincrease real output without causing inflation,they can pursue a policy that will |
(A) increase aggregate demand and decreaseaggregate supply by equal amounts |