Question

1. The earthquake and the Fukushima nuclear disaster in Japan in 2011 may be illustrated by

A aggregate demand curve shifts rightward.

B. a rightward shift in LRAS and an upward shift in the AS curves

C. a leftward shift in LRAS and an upward shift in the AS curves

real wage rate falls.

2. Which of the following shifts the AS curve for the Turkish economy to the right? A.productivity increase of 3% in Turkish manufacturing industry, B.30% increase in the minimum wage, C. fall in world oil prices

A and B

C only

A only

A and C

A, B, and B

3. ________ increases the natural rate of output.

A. A recession

B. An increase in the amount of human capital

C. A decrease in the money wage rate

D. A recessionary gap

E. An increase in aggregate demand

4. Real GDP definitely increases if:

A. the AS curve shifts leftward and the AD curve does not shift.

B. both the AD curve and the AS curve shift rightward.

C. the AD curve shifts leftward and the AS curve shifts rightward.

D. both the AD curve and AS curve shift leftward.

E. potential GDP decreases so that real GDP exceeds potential GDP.

5. When a person’s income was $50 per month, the person spent $48. When the person’s income rises to $60 per month, the person’s spending rises to $55. The person’s marginal propensity to consume is:

A. 0.7

B. between 0.81 and 0.88.

C. 0.88

D. 0.845

E. 0.96 when income was $50/month, and 0.92 when income is $60/month.

6. The MPC is 0.90 . If government expenditures on goods and services increases by $2.0 billion, after the multiplier effect works out, aggregate expenditure increases by

A. $10 billion.

B. $20 billion.

C. $2.22 billion.

D. $1.8 billion.

E. $2.0 billion.

7. In the money market, if the quantity of money supplied exceeds the quantity of money demanded, the nominal interest rate will ________ and the prices of assets will ________.

A. rise; increase

B. fall; not change

C. rise; decrease

D. fall; decrease

E. fall; increase

8. In the short run, when the central bank increases the quantity of money, the

A. quantity demanded of money decreases.

B. nominal interest rate falls.

C. demand for money increases.

D. price level decreases.

E. demand for money decreases.

9. If the quantity of money supplied ________ the quantity demanded, in the long run the value of money ________.

A. exceeds; falls as people spend their surplus money

B. exceeds; rises as people buy bonds

C. is less than; falls as people spend their surplus money

D. is less than; does not change unless the Fed increases the money supply

equals; equals zero

Answer 1