Which of the following statements about modern macroeconomic theory is most
accurate?
a. Keynes’ ideas help us understand movements in output around its long-run trend,
while the Classical model is more useful in explaining the long-run trend itself.
b. The classical model helps us understand movements in output around its long-run
trend, while the short-run macro model is more useful in explaining the long-run trend
itself.
c. Both classical and short-run macro models help us understand movements in output
around its long-run trend, but neither model is effective at explaining the long-run trend
itself.
d. Neither the classical nor the short-run macro model helps us understand movements
in output around its long-run trend, but both are useful in explaining the long-run trend
itself.
e. Only the short-run macro model is useful in understanding movements in output
around its long-run trend, and in explaining the long-run trend itself.
A decrease in demand and an increase in supply results in a(n)
a. decrease in equilibrium price and an ambiguous effect on equilibrium quantity
b. increase in equilibrium price and an ambiguous effect on equilibrium quantity
c. ambiguous effect on equilibrium price and an increase in equilibrium quantity
d. ambiguous effect on equilibrium price and an decrease in equilibrium quantity
e. increase in equilibrium price and a decrease in equilibrium quantity
To measure the annual increase in the capital stock most broadly, we should include
a. business purchases of plant and equipment, changes in inventory, and new home
construction
b. private investment spending plus government investment spending
c. stocks and bonds purchased by firms, total investment, and human capital
d. purchases of durable goods and human capital
e. net private investment spending, net government investment spending, purchases of
durable goods, and investment in human capital
Normative economics deals with
a. social norms and customs that influence economic behavior
b. norms of behavior that can be taken as facts
c. statements of fact
d. statements about the value of a proposed policy
e. government rules and regulations that drag down the economy
A financial intermediary less strictly regulated than a bank, and with no government
guaranteed deposits is known as a
a. non-bank.
b. junior bank.
c. secondary bank.
d. trade bank.
e. intermediary bank.
Countercyclical fiscal policy has a serious problem with
a. overshooting the desired impact by a factor of 10.
b. the irreversibility of actions.
c. the tendency of the Federal Reserve to immediately counter Congressional action.
d. the courts as it has been held to be unconstitutional.
e. overshooting the desired impact by a factor of 3.
If the price of film increases, the demand for film processing would decrease; moreover,
the equilibrium price and quantity of film processing should also decrease.
The chief economic cost associated with unemployment is
a. the benefits paid to the unemployed by the government
b. the foregone output that would have been produced if those individuals were
employed
c. the taxes that are passed along to individuals to pay for unemployment insurance
d. higher crime rates
e. the psychological costs associated with unemployment
The demand deposit multiplier is the number by which we must multiply the
a. injection of reserves to get the total change in demand deposits
b. total amount of demand deposits to get the total change in the money supply
c. level of required reserves to get the total change in the money supply
d. total amount of currency in circulation to find total demand deposits
e. change in demand deposits to find the total change in the money supply
Economics is
a. a discipline in the physical sciences
b. a field that deals exclusively with normative issues
c. a field that deals exclusively with positive issues
d. only useful for examining behavior in capitalist economies
e. a discipline that focuses on how choices are made in society
Government policies that help increase the skills of the workforce or that subsidize
employment more directly would
a. decrease employment and increase output
b. increase employment and decrease output
c. increase employment and increase output
d. increase unemployment and decrease output
e. increase unemployment and increase output
The cash that is counted as part of M1 does not include vault cash.
