Please answer multiple choice queastions

Flag question: Question 1

In the macroeconomic frameworks we are considering in this course, what is the primary tool used to understand business cycles?

1. The invisible hand
2. The circular flow model
3. The AD-AS framework
4. The production function

Flag question: Question 2

Booms may not be desirable because they bring with them ______

1. Unemployment
2. Inflation
3. Trade deficits
4. Budget deficits

Flag question: Question 3

Since the 1950s...

1. U.S. business cycle fluctuations have not changed.
2. the United States has not experienced a business cycle.
3. U.S. business cycle fluctuations have become milder.
4. U.S. business cycle fluctuations have become more volatile.

Flag question: Question 4

Which of the following explains why fluctuations in real GDP have become less volatile in the United States since 1950?

1. Services have become a smaller fraction of GDP since the 1950s and the government has become more reluctant to intervene when real GDP declines and unemployment rises since the 1950s.
2. Demand stability as a result of expanded government safety nets that have become more prevalent since the 1950s.
3. The government has become more reluctant to intervene when real GDP declines and unemployment rises since the 1950s.
4. Services have become a smaller fraction of GDP since the 1950s.

Flag question: Question 5

Real investment spending (by firms on productive assets and by households on new housing stock) is:

1. Strongly procyclical
2. Less volatile than GDP
3. Unrelated to business cycles
4. Much less volatile than real consumption spending by households

Flag question: Question 6

A shift to a _________-oriented economy can contribute to softer business cycles because firms can more flexibly and smoothly respond and adjust to changing demand.

1. Service
2. Growth
3. Manufacturing
4. Demand

Flag question: Question 7

Household consumption depends on:

1. Household disposable income
2. Household expectations of the future
3. Price level in the economy
4. Interest rates in the economy

Group of answer choices

1. 1 and 2 only
2. All the options provided
3. 1 only
4. 1 and 3 only

Flag question: Question 8

The key to understanding why the aggregate demand curve slopes downward is in:

1. Understanding how aggregate supply relates to aggregate demand
2. Understanding how the global economy works
3. Understanding the relationship between changes in the price level and changes in the real purchasing power of economic agents
4. Understanding the relationship between the demand for widgets and the price of widgets

Flag question: Question 9

All else equal, which of the following will shift the aggregate demand curve to the left?

1. an increase in net exports
2. an increase in expected profits for firms
3. an increase in interest rates
4. an increase in disposable income

Flag question: Question 10

All else equal, rosier expectations of the future by households and firms ______.

1. Moves the economy up along a stationary AD curve.
2. Shifts the AD curve to the right.
3. Moves the economy down along a stationary AD curve.
4. Shifts the AD curve to the left.

Flag question: Question 11

All else equal, which of the following would cause the SRAS curve to shift to the left?

1. A technological advancement
2. An increase in business taxes
3. A decrease in real cost of capital
4. A decrease in real cost of labor

Flag question: Question 12

The long-run aggregate supply curve:

1. Is determined by the production function
2. Represents the steady-state, sustainable, potential real output of an economy
3. All the options provided
4. Is vertical because steady-state, sustainable real GDP does not depend on the aggregate price level

Flag question: Question 13

The long-run aggregate supply curve and, if modeled, the long-run aggregate demand curve would be the same thing because in the circular flow of the economy...

1. there is equality between total output and total income.
2. there is equality between total income and total spending.
3. Both are correct

Flag question: Question 14

When the economy is in a recession with a negative "output gap,"

1. there is a tendency for wages to rise.
2. there is a tendency for the aggregate price level to rise.
3. there is a tendency for capacity utilization to be above the optimal level.
4. there are idle resources - capital and labor - in the economy.

Flag question: Question 15

When the economy is in a "boom," with a positive "output gap,"

1. there is a tendency for wages to decrease.
2. there is a tendency for aggregate price levels to rise.
3. there is a tendency for capacity utilization to fall.
4. there is a tendency for the cost of capital to decrease.

Flag question: Question 16

Stagflation is low GDP growth and __________. It usually results from a/an ____________.

1. inflation; a demand shock.
2. inflation; a supply shock.
3. deflation; a supply shock.
4. deflation; a demand shock.

Flag question: Question 17

A healthy economy operating at steady-state GDP growth rate would expect to have __________

1. structural unemployment
2. no unemployment
3. cyclical unemployment
4. frictional unemployment

Flag question: Question 18

The unemployment gap is exacerbated if the real wage is stuck __________ the equilibrium, market clearing wage.

1. at
2. None of the options provided
3. above
4. below

Flag question: Question 19

__________ unemployment generally follows overall economic output.

1. efficient unemployment
2. frictional unemployment
3. structural unemployment
4. cyclical unemployment

Flag question: Question 20

__________ unemployment reflects an overall inefficient economy, a less than robust aggregate production function.

1. structural unemployment
2. frictional unemployment
3. efficient unemployment
4. cyclical unemployment

Flag question: Question 21

Labor market regulations that impede firing employees are sometimes referred to as "can't fire; don't hire" policies. As such, somewhat paradoxically, they can contribute to __________.

1. cyclical unemployment
2. structural unemployment
3. frictional unemployment

Flag question: Question 22

If an economy is experiencing deflation and the real interest rate is 3%, the nominal interest rate will be __________.

1. more than 3%
2. less than 3%
3. 3%
4. not enough information given to answer

Flag question: Question 23

The uncertainty around the expected inflation rate can lead economic agents to __________.

1. build in an inflation risk premium
2. increase the rate of investment
3. decrease their taxes
4. None of the options provided

Flag question: Question 24

"__________" capture the notion of the difficulty firms have in setting the optimal product and pricing mix in an inflationary environment.

1. Menu costs
2. Anticipation costs
3. Redistribution costs
4. Shoe leather costs

Flag question: Question 25

"__________ " capture the notion of the myriad of inefficiencies and transaction costs that inflation brings to an economy.

1. Anticipation costs
2. Shoe leather costs
3. Menu costs
4. Redistribution costs

Flag question: Question 26

If the price index is higher year-on-year but the rate of increase is slowing, the economy is experiencing ______________.

1. price stability
2. deflation
3. disinflation
4. inflation

Flag question: Question 27

Because aggregate demand tends to move to the right further/faster than short-run aggregate supply, it is common for an economy to have a low level of __________ even when at steady-state output.

1. Demand-push deflation
2. Demand- pull inflation
3. Deflation
4. Cost-push inflation

Flag question: Question 28

The "natural rate" of unemployment is sometimes called the nonaccelerating __________ rate of unemployment.

1. Frictional
2. Cyclical
3. Inflation
4. Structural

Flag question: Question 29

According to the quantity theory of money, if the money supply grows faster than the real GDP, there will be __________ and if the money supply grows slower than the real GDP, there will be __________.

1. expanded real growth; contracted real growth
2. inflation; deflation
3. contracted real growth; expanded real growth
4. deflation; inflation

Flag question: Question 30

According to Milton Friedman, the best description for the cause of inflation is quite succinct: "Too much money chasing too few goods." More formally, this is captured in the _________________ of money.

1. Value Theory
2. Quantity Theory
3. Inflation Theory
4. Supply Theory