Trang chủ 26. Test - Economics - No 22





Suppose the government borrowed 140 billion dollars and cut taxes in an equivalent amount.

According to the Rational Expectations theory:



Congress passes a law that requires government spending rise each year by exactly the inflation rate.

The year the law was passed the budget was balanced, inflation was moderate, and unemployment

Was at the natural rate. What could be said about the government's budgetary position if national

Income declines?



How will an unanticipated increase in aggregate demand emanating from an increase in business and

Consumer optimism influence equilibrium output in the goods and services market?



Since 1960, the federal budget deficit as a percent of GNP has generally ________ during recessions

And ________ during periods of economic expansion.



The consumption function shows the relationship between consumption and:



If income of a family increases from $20,000 to $25,000 and consumption from $18,000 to $22,500,

Then the family's marginal propensity to consume is ________.



Which of the following are reasons why inflation is problematic for lenders


. Lenders will not be compensated for inflation levels higher than

Expectations


II. Inflation lower than expectations impacts lenders' profits


III. Inflation causes nominal interest rates to be higher




Which of the following will most likely cause an increase (shift to the right) in the long-run aggregate

Supply curve?



The GDP deflator equals

If an economy is operating in a range where its aggregate supply curve is vertical, then

Suppose the Fed purchases $100 million worth of Treasury bonds in the open market. This will cause

Loanable funds to ________. In the short run, the real interest rate will ________.



Which of the following are reasons why budget deficits may lead to increase in the published cost of


Borrowing?

I. Increased demand for loanable funds

II. Rational expectation of future tax increases or spending cuts

III. Inflation



The equation of exchange states that



The Department of Commerce sums the payments made to resources wages, self-employment

Income, rents, interest, profits, indirect taxes and depreciation to arrive at GDP. This method of

Deriving GDP is called the



Gretchen represents a union of teachers attempting to negotiate a new collective bargaining

Agreement. She makes an estimation that inflation will be 5% going forward based on the average of

The last five years. She intends to have corresponding pay increases included in the union contract.

Which of the following economic terms describes her methodology?



In the Keynesian aggregate expenditure model, business decision makers will respond to an

Unplanned reduction in inventories by



If unanticipated expansionary monetary policy causes actual inflation to be higher than expected, then

In the short run,



Sean owns a factory that produces paper cups. Sean had expected the price of paper cups to remain


Fairly stable. However, he suddenly finds demand for his paper cups are exceeding his current

Production level, and he decides to raise prices. This increases his profits to the point that he is

Considering adding a third shift. Sean is unaware that the Central Bank has been expanding the

Money supply recently.

Which of the following statement is NOT true about the situation described above?