1) The short run aggregate supply function (SR AS) is upward-sloping because wages may be slow to adjust to changing economic conditions. The implication is that:

i. A decrease in the average price level (as measured by some price index, eg. CPI) impies that firms are receiving a higher price for their product, while their monetary labor costs are not increasing, thus increasing the firms' short run profitability. Firms respond by expanding production, hiring more labor and increasing the quantity supplied of goods and services.

ii. An decrease in the average price level (as measured by some price index, eg. CPI) impies that firms are receiving a lower price for their product, while their monetary labor costs are not decreasing, thus decreasing the firms' short run profitability. Firms respond by curtailing production, employing less labor and decreasing the quantity supplied of goods and services.

iii. An increase in the average price level (as measured by some price index, eg. CPI) impies that firms are receiving a higher price for their product, while their monetary labor costs are not increasing, thus increasing the firms' short run profitability. Firms respond by expanding production, hiring more labor and increasing the quantity supplied of goods and services. iv. An increase in the average price level (as measured by some price index, eg. CPI) impies that firms are receiving a higher price for their product, while their monetary labor costs are not increasing, thus decreasing the firms' short run profitability. Firms respond by curtailing production employing less labor and and decreasing the quantity supplied of goods and services.

A) iv only B) ii only C) iii only D) i only E) ii and iii

2)The long run aggregate supply (LR AS) diagramatical function is vertical because:

i. There are inefficiencies in labor markets.

ii. The natural rate level of real GDP (Y) is not a function of the average price level (P).

iii. Wages may be slow to adjust to changing economic conditions.

A) ii only

B). i, ii and iii C) i and iii D) iii only E) i only

3) Suppose the nation's Central Bank (CB) decides to engineer an increase in the nation's money supply, and begins the process with an open market operation (OMO), in which the CB purchases 2000t worth of Treasury securities from Household j (HH ). HHj deposits the entire 2,000t in cash into a demand deposit account at Bank A. Thus, the initial increase in total bank reserves is 2,000 t cash in the vault.The CB has set the rese requirement ratio (ra) at 25%. Bank A then lends out the entire increase in excess reserves. The increase in the money supply at this point is: eserve

A) t Demand Deposits and 1,500 t Currency in circulation.

B) 2,000 t Demand Deposits and 1,500 t Currency in circulation.

C) 1,500 t Demand Deposits and 2,000 t Currency in circulation.

D) 0 t Demand Deposits and 2,000 e Currency in circulation.

E) 2,000 t in Demand Deposits and 1,000 6 Currency in circulation.

4) The unemployment rate (%) never becomes equal to zero, even as an economy approaches the natural rate level of real GDP (YNR). due to certain, specific imperfections in labor markets (eg. Efficiency wages; eg. Labor unions). (See the diagram above.) The implication is that

A)The wage/salary paid by firms in a given labor market may be higher than the equilibrium wage, for a given set of labor demand (by firms) and labor supply (by households). Thus the quantity of labor that households want to supply at the higher wage will be less than the quantity demanded of labor by firms, resulting in unemployment.

B) The wage/salary paid by firms in a given labor market may be less than the equilibrium wage, for a given set of labor demand (by firms) and labor supply (by households). Thus the quantity of labor that households want to supply at the lower wage will exceed the quantity demanded of labor by firms, resulting in unemployment.

C) No unemployment results from a wage level that is above the equilibrium wage. for a given set of supply and demand functions for labor.

D) The wage/salary paid by firms in a given labor market may be less than the equilibrium wage, for a given set of labor demand (by firms) and labor supply (by households). Thus the quantity of labor that households want to supply at the lower wage will be less than the quantity demanded of labor by firms, resulting in unemployment.

E) The wage/salary paid by firms in a given labor market may be higher than the equilibrium wage, for a given set of labor demand (by firms) and labor supply (by households). Thus the quantity of labor that households want to supply at the higher wage will exceed the quantity demanded of labor by firms, resulting in unemployment.

5)National savings refers to:

i. Household savings.

ii. Business savings (retained earnings).

iii. Govermnent savings (which may be positive or negative).

A) i only B) i, ii and iii C) ii only D) i and iii E) iii only

6) Maximum possible deposit expansion will occur when:

i. Excess reserves equal zero, and banks can make no further loans.

ii. All of the initial increase in reserves have been converted into required reserves.

iii. The amount of deposit expansion can be supported by a level of required reserves equal to the initial increase in

A) i, ii and iii B) i and iii C) i only D) iii only

7) In 2019:

i. Total expenditure on final goods and services by households (C) in nation X = 500 e; of which 100 t is expenditure on final goods and services produced in other countries;

ii. Total expenditure on final goods and services by firms (1) in nation X = 800 ; of which 300 e is expenditure on final goods and services produced in other countries;

iii. Total expenditure on final goods and services by government (G) in nation X = 800 B; of which 200 t is expenditure on final goods and services produced in other countries;

iv. Total expenditure on final goods and services produced in nation X and purchased by citizens from other countries (X) = 1,000

Based on the above information, nominal GDP for 2019 is equal to:

NO CHOICE PLEASE EXPLAIN

8)Expansionary open market operations (OMO) by a nations's Central Bank (CB) refers to: i. The purchase of govermnent bonds (Treasury securities) by a nation's CB in a primary market transaction.

ii. The purchase of govermnent bonds (Treasury securities) by a nation's CB in a secondary market transaction.

iii. The selling of govermnent bonds (Treasury securities) by a nation's CB in a primary market transaction. iv. The selling of govermnent bonds (Treasury securities) by a nation's CB in a secondary market transaction.

A) i only B) i only ) iv only D) ii and iv E) iI only

9) Determine the point elasticity of demand for the given demand function p=30-q at quantity q=5 units.

A)1 B) -1 C) -5 D)5 E)0

10) Suppose the probability of the event "istemi lives 30 more years" (A) is 0.70 and the probability of the event "Kutluk lives 30 more years" (B) is 0.80. Assume that A and B are Independent events. Find the probability that both istemi and Kutluk DOES NOT Ilve 30 more years

A) 0.30 B) 0.20 C) 0.06 D) 0.70 E) 0.80

11) Increases in human capital can come:

A) from employing more machinery

B) from formal education and on-the-job learning

C) only from on-the-job experience

D) from nowhere because whatever human capital an individual possesses is what he or she was born with

E) only from formal schooling

12) The long run aggregate supply (LR AS) diagramatical function is vertical because:

A. There are inefficiencies in labor markets.

B. The natural rate level of real GDP (Y) is not a function of the average price level (P).

C. Wages may be slow to adjust to changing economic conditions.

D. An increase in the average price level (P) reduces the real value of Money.

E. All of the above.

13) The downward-sloping aggregate demand function is explained by:

A. The substitution effect of a price change.

B. The wealth effect of a price change.

C. The interest-rate effect of a price change.

D. Answers a, b, and c

E. Answers b and c.

14) The short run aggregate supply function (SR AS) is upward-sloping because:

A. Wages may be slow to adjust to changing economic conditions.

B. The natural rate level of real GDP (Y) is not a function of the average price level (P).

C. An increase in the average price level (P) reduces the real value of Money.

C. An increase in the average price level (P) increases the transaction demand for money. E. All of the above.

15) To measure nominal GDP, the value of imports is subtracted from the amount of expenditure in an economy by households (C), firms (1), and government (G), over a specified period of time, because:

A. Total expenditure in an economy by households (C), firms (1), and government (G) includes expenditure on goods and services that are produced in other countries.

B. Nominal GDP refers only to the value of final goods and services produced within the nation.

C. The value of imports refers to the value of goods and services which are produced in other nations and sold in the domestic country (ie. Turkey).

D. All of the above. Oe. None of the above.

16) Answer the following question with a starting point of simultaneous long run and short run macroeconomic equilibrium, with the overall production level in the economy at the natural rate level of real GDP (YNR). This equilibrium may be ilustrated in a diagram with the average price level (P) measured on the vertical axis, and real GDP (Y) measured on the horizontal axis. The long run equilibrikm is represented by the intersection of the vertical long run aggregrate supply function (LRAS), and the downward sloping aggregate demand function (AD). The short run equilibrium is represented by the intersection of the upward sloping short run aggregate supply function (SRAS), and the downward sloping aggregate demand function (AD). (See the diagram on the above panel.)

Question: The tradeoff of using expansionary fiscal and/or monetary policy to offset and reverse an economic downturn is:

A) A slower return to a greater level of real GDP (Y) and lower unemployment, with a higher average price level (P)

B) A quicker return to a greater level of real GDP (Y) and higher unemployment, with a higher average price level (P).

C) A quicker return to a greater level of real GDP (Y) and higher unemployment, with a lower average price level (P).

D) A quicker return to a greater level of real GDP (Y) and lower unemployment, with a higher average price level (P).

E) A quicker return to a greater level of real GDP (Y) and lower unemployment, with a lower average price level (P).