1. Economists who advocate the Keynesian theory of economics would say that prices and wages are

sticky and decreases in AD will decrease employment.

sticky and decreases in AD will decrease unemployment.

flexible and decreases in AD will decrease employment.

flexible and decreases in AD will decrease unemployment.

flexible and increases in AD will increase unemployment.

2. If Congress put a quota on foreign video games, then

more domestic jobs would be created and domestic producers would be more efficient.

domestic standard of living would decrease and the price of video games would increase.

foreign manufacturers would be more efficient and the price of video games would decrease.

domestic manufacturers would be more efficient and the price of video games would decrease.

domestic standard of living would increase and the price of video games would increase.

3. The United States dollar will appreciate compared to the Costa Rican peso under which of the following conditions?

The Federal Reserve makes an open market purchase.

There is a negative balance in the current account.

Interest rates increase in the United States.

Imports from Costa Rica increase as a result of CAFTA.

There is an increase in immigration from Costa Rica to the United States.

4. The election of a new president resulted in a significant increase in business confidence regarding the economy. How will this new confidence impact the loanable funds market in the short run?

Demand for Loanable Funds / Real Interest Rate

Increase / Increase

Increase / Decrease

Increase / No Change

Decrease / Decrease

Decrease / Increase

5. If the money supply increases and nominal GDP remains the same, then

price level increased.

price level decreased.

velocity increased.

velocity decreased.

RGDP increased.

6. If the Federal Reserve conducts an open market purchase, we can expect that

the short-run Phillips curve will shift left.

the short-run Phillips curve will shift right.

there will be a movement to the right along the short-run Phillips curve.

there will be a movement to the left along the short-run Phillips curve.

the long-run Phillips curve will shift right.

7. The best way to increase investment while holding real output level would be to

increase government spending and increase the money supply.

decrease government spending and increase the money supply.

increase government spending and decrease the money supply.

decrease government spending and decrease the money supply.

increase government spending and decrease taxes.

8. Stagflation (high unemployment and high inflation) might be inadvertently caused by

an increase in business taxes and an increase in government spending.

an increase in business taxes and an increase in business regulations.

a decrease in business taxes and an increase in business regulations.

a decrease in business regulation and an increase in government spending.

a decrease in business regulation and a decrease in personal income taxes.

9. All of the following will cause an increase in economic growthexcept

a change in technology.

an increase in the amount of capital goods.

an increase in the degree of excess capacity.

an increase in the factors of production.

an increase in education.

10. Economic growth would decrease if

consumer spending decreased.

employee wages increased.

floods ravaged the manufacturing sector in the north.

government spending decreases significantly.

the number of imports increased.