Hi, need help with macro assignment, please answer on questions from page 325 # 1 - 25 MCQs and list the letter that best answers the question AND give a brief explanation as to why. Explanations can include mathematics, fully labeled graphs, sentences.

AP Exam Practice Questions Multiple-Choice Questions 2. The public debt increases when a. the government collects more in taxes than it 1. The cyclically adjusted budget deficit adjusts the actual spends. budget deficit for the effect of b. the government runs a budget deficit. a. discretionary fiscal policy. c. taxes exceed transfer payments. b. discretionary monetary policy d. the budget balance is positive. c. inflation. e. individuals borrow for goods like houses and cars. d. transfer payments. e. the business cycle. Macro . Unit 5 Review 32510. According to the Quantity Theory of Money, 3. Which of the following is a potential problem with a. the money supply times velocity is equal to noming persistent increases in government debt? GDP. a. Government borrowing may crowd out private b. velocity varies significantly with the business cycle investment. b. Government debt is caused by budget deficits, which c. changes in the money supply have no long-run effect on the economy. are always bad for the economy. d. activist monetary policy is necessary to promote c. It will always lead the government to default. economic growth. d. It creates inflation because the government has to e. monetary policy rules promote business-cycle print money to pay it off. fluctuations. e. It causes automatic stabilizers to raise taxes in the future. 11. Which of the following measures the number of times 4. An increase in the money supply will generate which of the average dollar bill is spent per year? a. the natural rate of unemployment the following? b. the inflation tax a. a negative short-run effect on real GDP c. the unit of account b. an increase in real GDP in the long run d. the velocity of money c. a decrease in real GDP in the long run d. a decrease in the aggregate price level in the long run e. (M + P)/Y e. an increase in the aggregate price level in the short 12. Which of the following equations represents the run and the long run Quantity Theory of Money? 5. According to the concept of monetary neutrality, a. M XV = PXY changes in the money supply will affect which of the b. M X V = real GDP following in the long run? c. M X V = full employment GDP a. only real values c. employment d. M XP = VxY b. the aggregate price d. aggregate output e. Y/M = V level e. aggregate demand 13. What is the most important determinant of long-run 6. The short-run Phillips curve shows the relationship economic growth? between the inflation rate and the a. increased labor productivity a. GDP growth rate. d. real interest rate. b. increased population b. unemployment rate. e. nominal interest rate. c. low price level c. employment rate. d. expansionary monetary and fiscal policies 7. An increase in expected inflation has what effect on the e. deficit spending short-run Phillips curve? 14. Which of the following is a major reason for a, a movement up and to the left along the curve productivity growth? b. a movement down and to the right along the curve a. financial investment c. an upward shift of the curve b. an increase in aggregate demand d. a downward shift of the curve c. a decrease in the amount of capital available e. an increase in the slope of the curve d. an increase in the price of capital 8. The long-run Phillips curve is e. technological progress a. horizontal. d. downward-sloping. b. vertical. e. U-shaped. Refer to the following figure for Questions 15 and 16. c, upward-sloping Real GDP Total 9. The long-run Phillips curve illustrates which of the $40,000 B Productivity, following? a. a positive relationship between unemployment and inflation b. a negative relationship between unemployment and 20,000 A inflation c. that unemployment will always return to the natural rate d. that unemployment will adjust so that the economy experiences 2% inflation $10,000 30,000 Physical capital e. that output will adjust so that there is no unemployment or inflation in the long run 326 Macro . Unit 5 Long-Run Consequences of Stabilization Policies15. Assuming diminishing returns to physical capital, if physical capital per worker is $50,000, real GDP per Use the following graph to answer Question 22. worker will most likely equal which of the following? Quantity of a. more than $60,000 investment goods b. $60,000 c. less than $60,000 but greater than $40,000 d. $40,000 e. SO 16. An upward shift of the curve could be caused by which of the following a. an increase in real GDP per worker b. investment in physical capital c. diminishing returns to physical capital PPC d. increases in population e. rising total factor productivity 17. When the government spends money to create and Quantity of consumer goods implement new technologies, it has invested in 22. Which point on the graph will result in the least long- a. human capital. run growth? b. physical capital. a. A d. D c. infrastructure. b. B e. cannot be determined d. research and development. c. C e. political stability. 23. Crowding out leads to which of the following? 18. An outward shift of the production possibilities curve a. increased demand for loanable funds indicates which of the following? b. increased real interest rates a. a decrease in cyclical unemployment c. decreased interest-sensitive spending b. long-run economic growth d. lower rates of physical capital accumulation c. a reduction in productive resources e. all of the above d. a decrease in opportunity cost 24. Which of the following is a supply-side policy? e. a decrease in potential output and the natural rate a. decreasing incentives for saving and investing of unemployment b. increasing tax rates 19. In the aggregate demand and supply model, a rightward c. reducing infrastructure investment shift of the LRAS curve indicates which of the following? d. providing investment tax credits a. long-run economic growth e. all of the above b. an increase in unemployment 25. Supply-side fiscal policies have which of the following c. a decrease in real GDP effects? d. an increase in the aggregate price level a. decreasing SRAS e. an economic recovery b. shifting the LRAS to the right 20. Which of the following will lead to long-run economic c. decreasing potential output d. decreasing aggregate demand growth? a. a decrease in nominal wages e. increasing the money supply b. a decrease in the aggregate price level Free-Response On c. an increase in the production of consumer goods d. an increase in total factor productivity 1. Draw a correer short-run e. actual output that exceeds potential output Philline 21. The government can promote long-run economic your growth by la a. increasing education subsidies. i. b. increasing Social Security funding. c. decreasing unemployment compensation. b. On your or we effect o in the d. increasing military spending exp e. cutting taxes. Macro . Unit 5 Review 327