QUE

Suppose that Sara withdraws $450 from her savingsaccount at the local bank. She keeps $150 in cash and deposits the rest in a money market mutual fund. Which of the following has occurred?

M1 has increased by $450, and M2 has decreased by $150.

M1 has increased by $450, and M2has increased by $300.

M1 has increased by $150, but M2 remains unchanged.

M1 has decreased by $150, and M2 has decreased by $150

QUE

Which of the following statements is TRUE?

A.

In the short run there are larger fluctuations in GDP in comparison to the long-run.

B.

GDP and unemployment are positively correlated.

C.

Inflation hinders labor markets by forcing nominal wage cuts.

D.

Choices A and C are both true.

E.

None of the statements are true.

QUE

Suppose that the government spending multiplier is 2.5, and that the tax multiplier is -3.5.In the Keynesian Cross model,areduction in government spending and taxes of $100 million will ____ Real GDP by ____.

increase;$100 million

decrease;$100 million

increase;$600 million

decrease; $600 million

QUES

Suppose that the U.S. economy is initially in Long Run Macroeconomic Equilibrium. An increase in taxes will lead Real GDP to ____ in the short-run and the price level to ____ in the short run.

increase; fall

decrease; remain unchanged

decrease; fall

increase; remain unchanged

QUES

Refer to the graph below.Suppose the actual expenditure,Y,is $5trillion.As a result,inventories are ______________and unemployment will _____________________.

decreasing; decrease

decreasing; increase

increasing;increase

increasing; decrease

QUES

The existence of discouraged workers leads the unemployment rate to ____ the actual problem of jobless in the economy, because discouraged workers ____ considered unemployed.

overstate; are

understate; are

understate; are not

overstate; are not

QUES

The dismal republic of EconoLandhas been in existence for only two years. During its first year, the government spent $72 and collected $51 in taxes. During its second year, the government spent $98 and collected $92 in taxes. At the end of the second year, the government debt of the Republic of EconoLandwas how much?

$6

$15

$21

$27

QUES

B to A

C to B

B to C

A to B

QUES

Under a floating exchange rate, expansionary monetary policy __________________ output. Under a fixed exchange rate, expansionary monetary policy __________________ output.

increases; does not affect

does not affect;increases

decreases;does not affect

does not affect;does not affect

QUES

EconoLandis a closed economy and is defined by the following equations:

C = 0.8(Y - T)

I = 220 - 10r

(M/P)^d= Y - 100r

M = 2100

T = 400

G = 400

P = 2

Whatmustbe the equilibrium interest rate?

The same as the world interest rate.

A.9%

B.3%

C.approximately 6.8%

D.17%