macro past paper Qs only - Practice multiple choice...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Practice multiple choice questions Macroeconomics 1 Topics 9-14 1. Based on the Reserve Bank's policy reaction function, when inflation is high, the Reserve Bank ____ interest rates, thereby _____ short-run equilibrium output. A: increases; increasing B: increases; decreasing C: does not change; increasing D: decreases; increasing E: decreases; decreasing 2. Lower rates of inflation increase planned spending because A: the Reserve Bank reacts to the lower inflation by lowering interest rates. B: the reduction in wealth, resulting from the reduced real value of money, restrains spending. C: resources are redistributed from high-spending households to low- spending households. D: the prices of domestic goods sold abroad increase (with a constant exchange rate). E: the real value of money decreases. 3. For a given level of inflation, if concerns about future weakness in the economy causes businesses to reduce their spending on new capital, then the _____ shifts _____. A: aggregate demand curve; right B: aggregate demand curve; left C: short-run aggregate supply line; upward D: short-run aggregate supply line; downward E: long-run aggregate supply line; left 4. For a given level of inflation, if a rise in the stock market makes consumers more willing to spend (the wealth effect), then the _____ shifts _____. A: aggregate demand curve; right B: aggregate demand curve; left C: short-run aggregate supply line; upward D: short-run aggregate supply line; downward E: long-run aggregate supply line; left 5. Which of the following will shift the aggregate demand curve to the right? A: Income taxes are raised. B: The government increases spending on education. C: Consumers become pessimistic about the future. D: Business managers become pessimistic about the future. E: Foreign economies fall into recession, reducing their demand for domestic exports.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
6. When the Reserve Bank chooses a tighter monetary policy, it ____ the real interest rates more than normal which shifts the aggregate demand to the ________. A: lowers; left B: lowers; right C: does not change; right D: raises; left E: raises; right 7. When actual output equals potential output, there is ____ output gap and the rate of inflation will tend to ____. A: an expansionary; increase B: an expansionary; decrease C: no; remain the same D: a recessionary; increase E: a recessionary; decrease 8. When an expansionary gap exists, actual output _____ potential output and the rate of inflation will tend to ______. A: exceeds; increase B: exceeds; decrease C: equals; remain the same D: is less than; increase E: is less than; decrease 9. If the aggregate demand curve in an economy is Y = 20 000 – 20 000 p , current inflation ( p ) equals 0.08 (8%), and potential output ( Y *) equals 19 200, then in the short run, equilibrium output equals ____ and in the long run, the inflation rate equals ___ per cent. A: 19 200; 4
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 01/31/2012 for the course ECON econ taught by Professor A during the Three '11 term at University of New South Wales.

Page1 / 11

macro past paper Qs only - Practice multiple choice...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online