Final Exam Practice

Final Exam Practice

University

9 Qs

quiz-placeholder

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Final Exam Practice

Final Exam Practice

Assessment

Quiz

Social Studies

University

Hard

Created by

DR Fazle

Used 6+ times

FREE Resource

9 questions

Show all answers

1.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Frictional unemployment is to ________ as structural unemployment is to ________.

search; mismatch

temperature; rigidity

job training; output gap

all of the above

2.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

A good reason for policy makers to pursue a goal of stabilizing economic activity is that

high unemployment is always accompanied by high variability of unemployment

in a stable economy, there is little or no frictional unemployment

in a stable economy, there is little or no structural inflation

none of the above

3.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Shocks to the macroeconomy will cause a change in the equilibrium real interest rate, except ________.

permanent supply shocks

aggregate demand shocks

temporary supply shocks

all of the above

4.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

The Relationship Between Stabilizing Inflation and Stabilizing Economic Activity

 

The equilibrium real interest rate is the rate ________.

at which the output gap is zero

at which the inflation rate is low

controlled by the central bank

all of the above

5.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

If higher inflation ensues from a temporary negative supply shock, and in response, the central bank raises interest rates, then the resulting decrease in AD will return inflation back to its original level ________.

and no further action will be required by the central bank

but the ensuing positive output gap will lead to higher inflation once again so further interest rate increases will be required by the central bank to return inflation back to its long run level

but the ensuing negative output gap will lead to short-run increases in AS and the central bank will have to "undo" its original interest rate hike in order to return inflation back to its target rate

6.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

The marginal propensity to consume describes ________.

the tendency to consume fringe, or unusual items

the impact of a change in spending on income

the impact on consumption resulting from a change in income

7.

FILL IN THE BLANK QUESTION

30 sec • 1 pt

Autonomous consumption is 700 and the marginal propensity to consume is 0.6. Calculate the average propensity to save when disposable income is (a) 10,000, (b) 12,000, and (c) 15,000.

8.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

If high incomes inspire more saving than low incomes ________.

the average propensity to consume falls as income rises

the marginal propensity to consume rises as income rises

autonomous consumption falls as income rises

the average propensity to consume rises as wealth rises

9.

OPEN ENDED QUESTION

30 sec • 1 pt

An economy has a fixed price level, no imports, and no income taxes. MPC is 0.80, and real GDP is $250 billion. Businesses increase investment by $5 billion.

a.      Calculate the multiplier and the change in real GDP

b. Calculate the new real GDP and explain why real GDP increases by more than $5 billion.

 

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