1. Suppose that the Fed makes a $100 billion open-market sale of Treasury bonds, and the money multiplier is 6. Which of the following impacts are most likely to result?
a. The money supply shifts inward, and the equilibrium interest rate rises in the money market.
b. The money supply shifts outward, and the equilibrium interest rate falls in the money market.
c. Investment declines, causing the aggregate demand curve to shift leftward, reducing equilibrium real GDP and thus slowing the economy.
d. Both answers a. and c. are correct.
e. Both answers b. and c. above are correct
2) If the Fed reduces the discount rate, which of the following are most likely to result?
a. The money supply curve shifts rightward, and the equilibrium interest rate falls in the money
market.
b. Investment spending declines, causing the aggregate demand curve to shift leftward, reducing equilibrium real GDP and thus slowing the economy.
c. Investment spending rises, causing the aggregate demand curve to shift rightward, increasing equilibrium real GDP and thus accelerating the economy.
d. Both answers a. and b. above are correct.
e. Both answers a. and c. above are correct
3) With trade, the production possibilities for two nations lie
a. outside their consumption possibilities.
b. inside their consumption possibilities.
c. at a point equal to the world production possibilities curve.
d. None of the answers above are correct.
4) Free-trade theory suggests that when trade takes place
a. both nations will be worse off.
b. one nation must gain at the other nationâs expense.
c. both nations are better off.
d. one nation will gain and the other nation will
be neither better nor worse off.
1. Suppose that the Fed makes a $100 billion open-market sale of Treasury bonds, and the money multiplier is 6. Which of the following impacts are most likely to result?
a. The money supply shifts inward, and the equilibrium interest rate rises in the money market.
b. The money supply shifts outward, and the equilibrium interest rate falls in the money market.
c. Investment declines, causing the aggregate demand curve to shift leftward, reducing equilibrium real GDP and thus slowing the economy.
d. Both answers a. and c. are correct.
e. Both answers b. and c. above are correct
2) If the Fed reduces the discount rate, which of the following are most likely to result?
a. The money supply curve shifts rightward, and the equilibrium interest rate falls in the money
market.
b. Investment spending declines, causing the aggregate demand curve to shift leftward, reducing equilibrium real GDP and thus slowing the economy.
c. Investment spending rises, causing the aggregate demand curve to shift rightward, increasing equilibrium real GDP and thus accelerating the economy.
d. Both answers a. and b. above are correct.
e. Both answers a. and c. above are correct
3) With trade, the production possibilities for two nations lie
a. outside their consumption possibilities.
b. inside their consumption possibilities.
c. at a point equal to the world production possibilities curve.
d. None of the answers above are correct.
4) Free-trade theory suggests that when trade takes place
a. both nations will be worse off.
b. one nation must gain at the other nationâs expense.
c. both nations are better off.
d. one nation will gain and the other nation will
be neither better nor worse off.
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Related questions
| 1. | In the money market, money supply is determined by the central bank, such as the Fed in the U.S. Because of this, money supply curve is usually vertical in the short run, while the money demand curve is downward sloping. The quantity demanded of money has an inverse relationship with the interest rate, but a direct relationship with both the price level and real GDP. Therefore, when the general price level increases, what will most likely happen? | ||||||||||||||||
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| 3. | Suppose workers become pessimistic about their future employment, which causes them to save more and spend less. If the economy is in the Keynesian range of the aggregate supply curve, then | ||||||||||||||||
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| 5. | Which of the following will shift the aggregate demand curve to the left? | ||||||||||||||||
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| 6. | Which of the following will shift the aggregate supply curve to the left? | ||||||||||||||||
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| 8. | There are also two kinds of deflation, the demand-pull deflation and cost-push deflation. Then which of the following is most likely to be true? | ||||||||||||||||
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| 9. | The short-run aggregate supply curve (SRAS) can be written as follows: Y = Yf + b (p - pe), where Y = real GDP, Yf = full-employment real GDP, p = price level, pe = expected price level, and b is a positive coefficient. The SRAS can be re-written as p = pe - (1/b)(Yf) + (1/b)(Y). Then which of the following is true? | ||||||||||||||||
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