Sonoma State UniversityDepartment ofEconomicsEeN 304Florence BouvetFall 2009Practice finalMultiple Choice Questions1. Inthe classical model with fixed output, the supply and demand for goods and services arebalanced bya. Government spendingb. taxesc. fiscal policytalinterest rate2. The natural rate of unemployment is:®The average rate of unemployment around which the economy fluctuatesb. About 10percent of the labor forcec. A rate that never changesd. The transition of individuals between employment and unemployment3. the one to one relation between the inflation rate and the nominal interest rate, the Fishereffect, assumes that thea. money supply isconstantb. velocity isconstantc. inflation rate isconstant(Ii.real interest rate isconstant4. the aggregate demand curve tells us possiblea. combinations of Yand M for a given value of Pb. combinations ofM and P for agiven value ofY~combinations of Pand Y foragiven value of Md. results ifthe Federal Reserve reduces the money supply5. Ifthe short-run aggregate supply curve ishorizontal, then a change inthe money supplywill change (compared with the initial equilibrium)inthe short run andchangeinthe long run.~). Only output; only prices
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