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WorksheetsMaroeconomics
Total questions: 125
Worksheet time: 11mins
Real GDP increases in response to
an increase in the price level
a decrease in the price level
The money supply
depends on the inflation rate
does not depend on the inflation rate
When Y increases, the demand for $
increases
decreases
When PL increases, the demand for $
increases
decreases
A decrease in PL leads to
an increase in real GDP
a decrease in real GDP
When PL increases, interest rates
increase
decrease
When the demand for money increases, the interest rate
increases
decreases
AD shows the inverse relationship between
PL and real GDP
PL and nominal GDP
PL and inflation
Inflation and real GDP
Inflation and nominal GDP
SRAS shows the inverse relationship between
inflation and unemployment
inflation and AD
the PL and AD
interest rates and unemployment
interest rates and AD
In the short run, when inflation increases, output
increases
decreases
In the short run, when inflation increases, unemployment
decreases
increases
In the short run, when prices increase, output
increases
decreases
If current real GDP is higher than full employment output, the economy is experiencing
expansion
recession
peak
trough
long-run equilibrium
If current output equals full employment output, the economy is experiencing
expansion
recession
peak
trough
long-run equilibrium
A positive demand shock causes the PL to
increase
decrease
A positive demand shock causes rGDP to
increase
decrease
A positive demand shock causes UR to
increase
decrease
A negative demand shock causes UR to
increase
decrease
When AD increases
rGDP increases, UR decreases, PL increases
rGDP increases, UR increases, PL increases
rGDP decreases, UR decreases, PL decreases
rGDP decreases, UR decreases, PL unchanged
When AD decreases
rGDP decreases, UR increases, PL decreases
rGDP decreases, UR increases, PL increases
rGDP increases, UR increases, PL decreases
rGDP increases, UR decreases, PL decreases
When SRAS increases, rGDP
increases
decreases
When SRAS increases, UR
increases
decreases
When SRAS increases, PL
increases
decreases
When SRAS decreases, rGDP
increases
decreases
When SRAS decreases, PL
increases
decreases
If SRAS increases, we end up with
lower prices, less unemployment, and more output
higher prices, more unemployment, and less output
When SRAS decreases, we end up with
higher prices, more unemployment, and less output
lower prices, less unemployment, and more output
If firms expect higher inflation in the future, today they will
increase production
decrease production
A budget deficit leads to
an increase in the demand for LF
a decrease in the demand for LF
A budget surplus leads to
an increase in the demand for LF
a decrease in the demand for LF
A budget deficit leads to
a decrease in the supply of LF
an increase in the supply of LF
A budget surplus leads to
an increase in the supply of LF
a decrease in the supply of LF
Under expansionary policy, interest rates
decrease
increase
A decrease in SRAS causes
SRPC to shift to the left
SRPC to shift to the right
a downward move along SRPC
an upward move along SRPC
An increase in SRAS causes
SRPC to shift to the left
SRPC to shift to the right
a downward move along the SRPC
an upward move along SRPC
When expansionary and contractionary policies conflict
Y, UR, and PL become ?
Y increases, UR increases, PL ?
Y ?, UR decreases, PL increases
Y decreases, UR decreases, decreases
A change in cyclical U causes
a move along the SRPC
a shift in the SRPC
a move along the LRPC
a shift in the LRPC
A shift in the SRPC causes
a shift in the SRAS
a move along the SRAS
a shift in the LRPC
a move along the LRPC
A change in natural U causes
a shift in the LRPC
a move along the LRPC
a shift in the SRPC
a move along the SRPC
SRAS and SRPC move in
opposite directions
the same direction
When the demand for LF decreases, real interest rates
increase
decrease
When the supply of LF decreases, real interest rates
increase
decrease
When disposable income increases, the supply of LF
increases
decreases
If business expectations increase, the demand for LF
increases
decreases
MS is determined by
MB + MM
MM
MB
MB + M1
Unanticipated inflation hurts
lenders
borrowers
Unanticipated inflation helps
lenders
borrowers
When AD increases, it causes
downward move along SRPC
upward move along SRPC
shift to the right in SRPC
shift to the left in SRPC
a shift to the right in LRPC
When AD decreases, it causes
downward move along SRPC
upward move along SRPC
shift to the right in SRPC
shift to the left in SRPC
a shift to the right in LRPC
The supply of LF shows the willingness to
save $
borrow $
In an open economy, national savings =
private savings + public savings + NCI
public savings
public savings + NCI
private savings - taxes + public savings
private savings + public savings
In a closed economy, national savings =
private savings + public savings + NCI
public savings
public savings + NCI
private savings - taxes + public savings
private savings + public savings
The supply of LF is NOT affected by
Government policies
Changes in public savings
Changes in savings behavior
Changes in capital inflows
The demand for LF is affected by
Government policies
Changes in capital inflows
Changes in public savings
Changes in anticipated RoR on investment spending
Changes in saving behavior
If the value of the currency appreciates, demand for it
increases
decreases
When the currency appreciates
exports increase; exports decrease
imports and exports increase
imports and exports decrease
exports decrease; imports increase
When the currency depreciates
exports increase; imports decrease
imports and exports increase
imports and exports decrease
exports decrease; imports increase
A growing economy causes the currency to
appreciate
depreciate
A weakening economy causes the currency to
appreciate
depreciate
Trade Surplus =
Exports > Imports
Imports > Exports
Trade Deficit =
Exports > Imports
Imports > Exports
Currency appreciation is linked to
supply
demand
The natural rate of unemployment =
frictional + structural
frictional + structural + cyclical
structural + cyclical
frictional + cyclical
if a currency appreciates, its imported goods get
cheaper
more expensive
if a currency depreciates, its imported goods get
cheaper
more expensive
When a currency appreciates, its exports will
decrease
increase
If PL in the US increases, the real exchange rate of the dollar increases and the dollar
appreciates
depreciates
If PL in the US increases, the real exchange rate of the dollar
increases
decreases
A strong currency means a country exports
less
more
Financial capital flows
to the highest real interest rate
away from the highest real interest rate
A bowed out PPC indicates that opportunity costs are
increasing
decreasing
constant
A bowed in PPC indicates that opportunity costs are
increasing
decreasing
constant
A straight PPC indicates that opportunity costs are
increasing
decreasing
constant
When country X charges country Y with tariffs, country X's currency
appreciates
depreciates
When the value of one currency changes, the other's currency changes
in the same direction
in the opposite direction
Tariffs decrease the currency supply of the
country paying the tariff
country charging the tariff
Tariffs decrease the currency demand of the
country paying the tariff
country charging the tariff
When a currency's demand increases, it
appreciates
depreciates
If people in the US want to buy Japanese goods,
supply of USD will increase; demand for yen will decrease
supply of USD will increase; demand for yen will increase
supply of USD will decrease; demand for yen will increase
supply of USD will decrease; demand for yen will decrease
When a country's currency depreciates, its exports, output and employment
increase
decrease
When a country's currency appreciates, its exports, output and employment
increase
decrease
An increase in interest rates causes the currency to
appreciate
depreciate
When a country's interest rate goes up, it causes capital to flow
into its economy
out of its economy
If the central bank wants to depreciate the currency, it should
sell its own currency or buy another country's currency
buy its own currency or sell another country's currency
sell bonds
increase interest payments on excess reserves
Selling bonds increases
nominal interest rates
real interest rates
An increase in business optimism causes
real interest rates to increase
nominal interest rates to increase
real interest rates to decrease
nominal interest rates to decrease
As a result of an appreciated currency, net exports
decrease
increase
When net exports decrease,
AD decreases, rGDP decreases, UR increases
AD decreases, rGDP decreases, UR increases
AD increases, rGDP increases, UR decreases
AD increases, rGDP increases, UR decreases
When net exports increase, AD
increases
decreases
Interest rates and exports move in
opposite directions
the same direction
Higher interest rates cause the currency to
depreciate
appreciate
Appreciation and imports move in
the same direction
opposite directions
When a currency depreciates, its supply curve shifts
right
left
When a currency depreciates, its demand curve shifts
right
left
When a currency appreciates, its demand curve shifts
right
left
When a currency appreciates, its supply curve shifts
right
left
AD is the sum of
Consumption
Investment
Government Spending
Net Exports
Imports
When net exports decrease, output and employment
increase
decrease
A tariff causes a currency's demand curve to shift
left
right
Inflation cause the currency to
appreciate
depreciate
Movement of financial assets is counted in the
financial account
current account
Movement of goods and services is included in the
financial account
current account
The balance of payments includes
imports
exports
all and all international transactions
The balance of payments is
always balanced
usually balanced
sometimes balanced
never balanced
A surplus in the financial account creates
a deficit in the current account
a surplus in the current account
A change in wages causes a shift to the right in
AD
SRAS
LRAS
Imports, exports, remittances, and factor income are included in the
current account
financial account
Expansionary monetary policy causes
interest rates and exchange rate to decrease; and PL to increase
interest rates, the exchange rate, and PL to decrease
interest rates, the exchange rate, and PL to increase
interest rates and PL increase; exchange rate decreases
interest rates to decrease; PL and exchange rates increase
Appreciation causes
an increase in output, employment, and price level
a decrease in output, employment and price level
Depreciation causes
an increase in output, employment, and price level
a decrease in output, employment and price level
The lowest interest rate that banks charge non-bank borrowers
prime rate
federal funds rate
discount rate
LIBOR
reserve requirement
What the Fed charges banks
prime rate
federal funds rate
discount rate
LIBOR
reserve requirement
The interest rate that banks charge other banks
prime rate
federal funds rate
discount rate
LIBOR
reserve requirement
Liquidity preference affects the
demand for money
supply of money
An increase in the supply of money
decreases nominal interest rates
increases nominal interest rates
increases real interest rates
decreases real interest rates
A bank only has to keep a reserve on
deposits
assets
deposits and assets
The change in the money supply is always
greater than the change in the monetary base
less than the change in the monetary base
equal to the change in the monetary base
A budget deficit causes interest rates to
increase
decrease
A budget surplus causes interest rates to
increase
decrease
Bond prices and bond interest rates have a
positive correlation
negative correlation
When the demand for money increases, nominal interest rates
increase
decrease
For cost-push inflation to occur
demand must be inelastic
demand must be elastic
supply must be inelastic
supply must be elastic
Demand-pull inflation occurs when there is
an increase in AD
a decrease in AD
an increase in AS
a decrease in AS
Demand-pull inflation usually occurs
during expansion
during contraction
Cost-push inflation usually occurs
during expansion
during contraction
