Practice Exam 3-guesses

Practice Exam 3-guesses - Practice Exam 3 1. During a...

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Practice Exam 3 1. During a recession the economy experiences a.rising employment and income. b. rising employment and falling income. c.rising income and falling employment. d. falling employment and income. 2. Which part of real GDP fluctuates most over the course of the business cycle? a.consumption expenditures b. government expenditures c. investment expenditures d. net exports 3. Most economists believe that classical macroeconomic theory is a good description of the world a.in neither the short nor long run. b. in the short run and in the long run. c.in the short run, but not in the long run. d. in the long run, but not in the short run. 4. The model of short-run economic fluctuations focuses on the price level and a. real GDP. b. economic growth.
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c.the neutrality of money. d. None of the above is correct. 5. Other things the same , as the price level rises, exchange rates a. and interest rates rise. b. and interest rates fall. c.fall and interest rates rise. d. rise and interest rates fall. 6. Other things the sam e, if the price level rises, households a.increase foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange increases. b. increase foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange decreases. c.decrease foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange increases. d. decrease foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange decreases. 7. When the dollar depreciates, each dollar buys a.more foreign currency, and so buys more foreign goods. b. more foreign currency, and so buys fewer foreign goods. c.less foreign currency, and so buys more foreign goods. d. less foreign currency, and so buys fewer foreign goods. 8. The Central Bank of Libertina increases the money supply at the same time the Parliament of Libertina passes a new investment tax credit. Consider the effects of these policies on the Libertinian economy. The money supply increase a. and the investment tax credit each cause aggregate demand to shift right. b. and the investment tax credit each cause aggregate demand to shift left. c.causes aggregate demand to right, while the investment tax credit causes aggregate demand to shift left.
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d. causes aggregate demand to shift left, while the investment tax credit causes the aggregate demand curve to shift right. 9. According to the aggregate demand and aggregate supply model, in the long run an
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Practice Exam 3-guesses - Practice Exam 3 1. During a...

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