Exam2-su05 - Note: This exam consists of 50 multiple choice...

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Note: This exam consists of 50 multiple choice questions, 2 points each for the maximum total of 100. Select the best choice and summarize your answers in the separate answer sheet. Turn in both your answers and the exam when you are finished. 1. The relationship between the quantity of output demanded and the aggregate price level is called: A) aggregate demand. B) aggregate supply. C) aggregate output. D) aggregate consumption. 2. For a fixed money supply, the aggregate demand curve slopes downward because at a lower price level real money balances are ______ generating a ______ quantity of output demanded. A) higher; greater B) higher; smaller C) lower; greater D) lower; smaller 3. If the short-run aggregate supply curve is horizontal, then the: A) classical dichotomy is satisfied. B) money supply cannot affect prices in the short run. C) money supply cannot affect output in the short run. D) money supply is irrelevant in the short run. 4. If a short-run equilibrium occurs at a level of output above the natural rate, then in the transition to the long run prices will ______ and output will ______. A) increase; increase B) decrease; decrease C) increase; decrease D) decrease; increase 5. An adverse supply shock ______ the short-run aggregate supply curve ______ the natural level of output. A) raises; but cannot affect B) raises; and may also lower C) lowers; but cannot affect D) lowers; and may also lower Page 1
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planned expenditure exceeds income: A) income falls. B) planned expenditure falls. C) unplanned inventory investment is negative. D) prices rise. 7. In the loanable funds model, a decrease in income ______ national saving and ______ the equilibrium interest rate. A) increases; increases B) increases; decreases C) decreases; decreases D) decreases; increases 8. The IS and LM curves together generally determine: A) income only. B) the interest rate only. C) both income and the interest rate. D) income, the interest rate, and the price level. 9. Equilibrium levels of income and interest rates are ______ related in the goods and services market, and equilibrium levels of income and interest rates are ______ related in the market for real money balances. A) positively; positively B) positively; negatively C) negatively; negatively D) negatively; positively 10. In the IS-LM model when taxation increases, in short-run equilibrium, in the usual case, the interest rate ______ and output ______. A) rises; falls B) rises; rises C) falls; rises D) falls; falls 11. If MPC = 0.75 (and there are no income taxes) when G increases by 100, then the curve for any given interest rate shifts to the right by: A) 100. 2
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This note was uploaded on 11/17/2009 for the course ECO 121212 taught by Professor Smith during the Spring '09 term at Culver-Stockton.

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Exam2-su05 - Note: This exam consists of 50 multiple choice...

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