Multiple Choice Show Identify the letter of the choice that best completes the statement or answers the question. 1. Which of the following is an example of active fiscal policy?
2. Negative net exports means that
3. Which of the following is not an example of an automatic stabilizer?
4. To decrease the money supply, the Fed would
5. The aggregate supply-aggregate demand model predicts that an unexpected increase in government spending will have what short-run effects?
6. Which of the following would be included in Gross National Product (GNP) but not in Gross Domestic Product (GDP) of the United States?
7. According to the following information, what is the unemployment rate? (Round to the nearest tenth of a percent.) Number of Employed: 10,000 Number of Unemployed: 500 Not in the Labor Force:
3,000
8. In economics, “National Saving” is calculated by
9. Which of the following is NOT one of the components of aggregate demand?
10. In the long-run, higher saving leads to
11. Which of the following is not included in a country’s Gross Domestic Product (GDP)?
12. Which of the following statements are correct?
13. The quantity equation relates a measure of the money supply (M), to the velocity of money (V), the GDP deflator (P) and real GDP (Y). Which of the following expression accurately describes the quantity equation?
14. An increase in the minimum wage will likely:
15. According to the loanable funds framework, if businesses reduce their willingness to spend money on new capital equipment,
16. Governments can increase the likelihood of economic development by
What would make the price level decrease and real GDP increase?The intuition behind the real wealth effect is that when the price level decreases, it takes less money to buy goods and services. The money you have is now worth more and you feel wealthier. So, in response to a decrease in the price level, real GDP will increase.
What would cause a decrease in real GDP?A country's real GDP can drop as a result of shifts in demand, increasing interest rates, government spending reductions and other factors. As a business owner, it's important to know how this number fluctuates over time so you can adjust your sales strategies accordingly.
Which of the following would cause prices to fall and real GDP to rise in the short run?Which of the following would cause prices and real GDP to rise in the short run? rises, shifting aggregate supply left. The reserve requirement is 4 percent, banks hold no excess reserves and people hold no currency.
What happens when price level and real GDP increase?Over time, the growth in GDP causes inflation—inflation, if left unchecked, runs the risk of morphing into hyperinflation. Most economists today agree that a small amount of inflation, about 1% to 2% a year, is more beneficial than detrimental to the economy.
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