Macroeconomic-Exam3d

Description:	bradley r. schiller
Category:	Business
Created by:	leepao07 on 2009-07-26

Question	Answer
the value of final output produced in a given period, adjusted for changing prices.	real GDP
the idea that whatever is produced by suppliers will always be sold.	Say's Law
potential GDP	full employment GDP
the use of tax cuts and government deregulation to shift the aggregate supply curve	supply-side policy
the portion of the business cycle when total output decreases	recession
an increase in the average level of prices of goods and services	inflation
the concept of nonintervention by government in the market mechanism	laissez faire
a situation in which the economy grows but at a very slow rate	growth recession
states that an increase in price causes a decrase in quantity demanded of a good.	law of demand
the total quantity of output producers are willing and able to supply at laternative price levels in a given time period, ceteris paribus	aggregate supply
the combination of price level and real output that is compatible with both aggregate demand and aggregate supply.	equilibrium
the area of study that focuses on output, jobs, prices, and growth of the entire economy.	macroeconomics
the use of money and credit controls to shift the aggregate demand curve	monetary policy
the use of government spending and taxes to shift the aggregate demand curve	fiscal policy
occurs as a result of shifts in aggregate demand and aggregate supply	business cycle
the total quantity of output demanded at alternative price levels in a given time period, ceteris paribus.	aggregate demand
business cycles are measured by changes in real GDP. TRUE or FALSE?	true
during the business cycle, unemployment and production typically move in the same direction. TRUE or FALSE?	false
in the classical view of the economy, the product market is brought into equilibrium by flexible prices, and the labor market is brought into equilibrium by flexible wages. TRUE or FALSE?	true
business cycles result from shifts of the aggregate supply and aggregate demand curves. TRUE or FALSE?	true
the US economy has grown at a steady pace since 1930. TRUE or FALSE?	false
the economy is in a recession if real GDP grows at a rate less than the long-run trend. TRUE or FALSE?	false
the full-employment GDP is the same as the equilibrium GDP. TRUE or FALSE?	flase
Keynes believed that unemployment could sxist for long periods for long periods of time if aggregate demand was inadequate. TRUE or FALSE?	true
both Keynesian and Monetarist theories focus on shifting the aggregate demand curve.	false
supply-side theories believe the unwillingness of producers to supply more goods and services at existing prices can prolong an economic downturn. TRUE or FALSE?	True
determinants of macro performance include: a)internal market forces b)external shocks c)policy levers d)all of the above	d)all of the above
business cycles in the United States: a)are remarkably similar in length but vary greatly in intensity b)vary greatly in length, frequency, and intensity c)are similar in frequency and intensity d)are similar in length, frequency, and intensity.	b)vary greatly in length, frequency, and intensity
which of the following is inherent in the classical view of a self-adjusting economy? a)flexible wages and prices b)inflexible wages and prices c)Schiller's Law d)Instability	a)flexible wages and prices
keynesian theory became important when classical economic theory did NOT adequately explain a: a)prolonged period of both inflation and unemployment b)prolonged growth recession c)depression d)prolonged period of inflation	c)depression
in aggregate demand-aggregate supply diagram: a)more than 1 equilibrium cn occur b)horizontal axis measures average price level c)intersection of two curves marks macro equilibrium d)the equilibrium level of output is always at the full employmnt level	c)the intersection of the two curves marks the macro equilibrium
which of the following is a reasons for a downward-sloping aggregate demand curve? a)the foreign-trade effect b)the profit effect c)the investment effect d)the consumption effect	a)the foreign-trade effect
refer to question #7	d)market demand applies to a given market while aggregate demand applies to the entire economy
refer to question #8	b)decreases which causes the interest rate to fall and loan-financed sales increase
wen the average price level falls in our economy, consumers tend to buy: a)more importd goods n fewer domestic goods b)more imported goods and more domestic goods c)fewer imported goods and more domestic goods d)fewer imprtd goods and fewer domestic goods	c)fewer imported goods and more domestic goods, ceteris paribus
which of the following is a reason why the aggregate supply curve is upward sloping? a)profit effect b)interest-rate effect c)real-balances effect d)foreign-trade effect	a)profit effect
the cost effect implies: a)that greater output results in increasingly higher costs b)a curved, upward-sloping aggregate supply curve c)that higher costs are reflected in higher average prices d)all of the above	d)all of the above
the macro equilibrium: a)aggregate quantity demanded equals aggregate quantity supplied b)the equilibrium price level and rate of output are both stable c)both buyers and sellers' intentions are satisfied d)all of the above	d)all of the above
when aggregate demand exceeds aggregate supply, what will happen to the price level? a)prices will fall b)prices will remain the same c)prices will rise d)prices may either rise or fall depending on the business cycle	c)prices will rise
which of the following shifts would definitely result in higher unemployment? a)demand shifts to the left and supply shifts to the rite b)demand shifts to the left and supply shifts to the left c)demand shifts to the rite and supply shifts to the rite	b)demand shifts to the left and supply shifts to the left
refer to question #15	a)the shape and sensitivity of aggregate demand and aggregate supply curves
according to Keynes, policy makers should respond to a downturn in the business cycle by: a)cuttin taxes and increasin govt spendin b)cuttin taxes and reducin govt spendin c)raisin taxes and increasin govt spendin d)raisin taxes and reducing govt spending	a) cutting taxes and increasing government spending
according to classical and monetarist theories, in the long run the aggregate supply curve is: a)horizontal at the equilibrium rate of output b)upward sloping to the right c)downward sloping to the right d)vertical at the natural rate of output	d)vertical at the natural rate of output
which of the following is NOT typically used to shift the aggregate demand curve or the aggregate supply curve? a)monetary policy b)international trade policy c)fiscal policy d)a laissez-faire approach	d)a laissez-faire approach
if equilibrium GDP is less than full employment GDP, an appropriate fiscal policy action would be to: a)increase AD by increasing income taxes b)increase AD by increasing government spending c)increase AS by reducing govt regulations	b)increase AD by increasing government spending
refer to question #20	b)decrease AD by increasing interest rates