QUESTION 12

1. In the short run, supply shocks cause prices to __________ and the output to __________.

a. increase;increase

b. increase;decrease

c. decrease;increase

d. decrease;decrease

QUESTION 17

1. Which of the following does not represent a form of expansionary fiscal policy?

a. increasing government spending

b. reducing taxes

c. increasing the money supply

d. providing incentives to businesses and households to spend more

2 points

QUESTION 18

1. When the U.S. price level rises, we expect foreigners to

a. buy more U.S. goods and services.

b. buy less U.S. goods and services.

c. buy the same amount of U.S. goods and services.

d. buy no U.S. goods and services.

2 points

QUESTION 20

1. A supply shock causes excess demand in the short run.

a.True

b. False

QUESTION 27

1. During the mid 1980s, the budget deficit __________ and the interest rate __________.

a. increased;increased

b. increased;decreased

c. decreased;increased

d. decreased;decreased

QUESTION 32

1. In the quantity theory of money, velocity means

a. the rate of the change in GDP.

b. the rate at which business inventories turn over in a year.

c. the rate at which the money supply turns over in a year.

d. the rate at which the Fed incrases the money supply.

2 points

QUESTION 39

In the long run, what is the effect of an increase in the money supply?

a. Inflation

b. Crowding out of private investment

c. An increase in aggregate demand

d. Stagflation