Micro/ Macro practice

Which of the following statements is normative?

• a. Large government deficits cause an economy to grow more slowly.
• People work harder if the wage is higher.
• The unemployment rate should be lower.
• Printing too much money causes inflation.

Kenneth needed a new shirt for the football game this Friday. He went to the mall and purchased a shirt from H&M. Which market does Kenneth receive his wages to purchase the shirt?

• product market
• factor market 
• firms 
• household

If OPEC decided to cut oil production for the coming year, what would be the MOST LIKELY effect?

• a.  prices would not change
• a.  oil prices would probably rise
• a.  oil prices would probably decline
• a.  the price for substitute products would decline

When people are in the process of looking for a job after being fired or are transitioning to a new position, this is called?

• Frictional Unemployment

• Structural Unemployment

• Cyclical Unemployment

A rightward shift in the aggregate demand curve with a horizontal aggregate supply curve will cause employment and the price level to change in which of the following ways?

• Increase Employment; Increase Price Level
• Increase Employment; No Change to Price Level
• No Change to Employment, Increase Price Level
• Increase Employment; Decrease Price Level

If Mr. Woodward's disposable income increases from $600 to $650 and her level of personal consumption expenditures increase from $480 to $520, you may conclude that her marginal propensity to

• consume is 0.8

• consume is 0.4

• save is 0.8

• save is 0.4

In the Keynesian aggregate-expenditure model, if the MPC is 0.75 and gross investment increases by $6 billion, equilibrium GDP will increase by

• $6 billion
• $8 billion
• $1.25 billion
• $24 billion

If an economy experiences a dramatic rise in prices, which fiscal policy action could be taken?

• Selling securities on the open market

• Raising interest rates

• Reducing government spending

• Raising reserve requirements

Assume that the nominal interest rate is 10 percent. If the expected inflation rate is 3 percent, the real interest rate is 

• 0.5% 
• 3% 
• 7%
• 10%

When the government spends more money than they take in each year is called a _________?

• Debt
• Deficit
• Surplus
• Expansionary