macroeconomics exercises

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28 Οκτ 2013 (πριν από 4 χρόνια και 11 μέρες)

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MACROECONOMICS





EXERCISES



MULTIPLE CHOICE QUESTIONS


1. In the aggregate supply relation, the current price level depends upon:

a. expected price level.

b. monetary policy.

c. fiscal policy.

d. consumer confidence.


2
. Which of the fo
llowing will cause the aggregate supply curve to shift down?

a. an increase in firms' markup over labor costs.

b. an increase in the expected price level.

c. an increase in unemployment benefits.

d
. none of the above.


3
. In the aggregate demand relation,
an increase in the price level causes output to decrease because of its
effect on:

a. government spending.

b. the money market and, subsequently, investment.

c. the nominal wage.

d. firms' markup over labor costs.


4
. Which of the following represents a
short
-
run effect of a monetary expansion?

a. an increase in
the
natural
level of
output.

b. a reduction in the interest rate.

c. an increase in the price level.

d. all of the above.


5
. Suppose a central bank implements a monetary contraction. Which of th
e following would we expect
to occur in the short run?

a. a reduction in the nominal wage.

b. the AD curve to shift to the right.

c. the price setting curve to shift down.

d. the wage setting curve to shift upward.


6. Assume the economy is initially oper
ating at the natural level of output. Which of the following events
will initially cause a shift of the aggregate supply curve?

a. an increase in the money supply.

b. an increase in government spending.

c. an increase in consumer confidence.

d. none of th
e above.


7
.
Assume that the economy is initially operating at the natural level of output. A reduction in consumer
confidence will cause:


a. an increase in investment in the short run


b. a reduction in the real wage in the medium run


c. an increas
e in the interest rate in the medium run


d. none of the above


8
. An increase in the price of oil will cause which of the following in the medium run?

a. no change in the level of output.

b. no change in the price level.

c. an increase in the unemploymen
t rate.

d. a reduction in the interest rate.


9
. Which of the following events will NOT cause an increase in the aggregate price level?


a. an increase in unemployment benefits


b. an increase in the markup


c. an increase in P
e


d. a reduction in out
put



10
. If Y < Y
n
, we know with certainty that:


a. P > P
e


b. P < P
e


c. P = P
e


d. u < u
n


11
. For this question, assume that the economy is initially operating at the natural level of output. A

reduction in consumer confidence will cause:


a
. an increase in the real wage in the medium run


b. a reduction in the real wage in the medium run


c. no change in the real wage in the medium run


d. ambiguous effects on the real wage in the medium run


12
.
A
ssume that the economy is initially oper
ating at the natural level of output. An increase in
unemployment benefits will cause:


a. an increase in the real wage in the medium run


b. a reduction in the real wage in the medium run


c. no change in the real wage in the medium run


d. ambiguous
effects on the real wage in the medium run


13
. As product markets become more competitive and the markup decreases, we would expect which of
the following to occur?


a. no change in the real wage in the medium run


b. an increase in the aggregate price

level and an increase in output in the medium run


c. an increase in the interest rate in the medium run


d
. an increase in the real wage in the medium run


14
. Based on your understanding of the AS/AD model, which of the following is an INCORRECT
state
ment about the short
-
run adjustment process for the macroeconomy?

a. Output in excess of the natural level leads to higher prices.

b. A reduction in employment leads to lower prices.

c. An increase in demand increases output.

d. An increase in output abov
e the natural level leads to higher nominal wages.

e. none of the above


1
5. Answer this question using the AS/AD model presented in the textbook. Which of the following
would cause a reduction in the natural level of output in the medium run?

a. a decre
ase in government spending.

b. a decrease in the money supply.

c. an increase in taxes.

d
. none of the above.


16
. For this question, assume that the economy is initially operating at the natural level of output. An

increase in taxes will cause which of

the following?



a. a reduction in output and no change in the aggregate price level in the short run



b. a reduction in employment and no change in the nominal wage in the short run



c. an increase in investment in the medium run


d. an increase in

the aggregate price level, no change in output and no change in the interest rate
in the medium run






ANSWERS TO MULTIPLE CHOICE QUESTIONS



1. a;

2
.
d
;

3
. b
;

4
.
d
;
5
.
a
;
6
.
d
;
7
.
d
;
8
. c
;
9
.
d
;
10
.

b
;
1
1.

c
;
12
.

c
;
13
.
d
;
14
.
d
;
15
.
d; 16. c.