ECO12

QN=302 (18029) Suppose the economy is in long-run equilibrium. If there is a sharp decline in the stock market combined with a significant increase in immigration of skilled workers, then in the short run

• ,a. real GDP will rise and the price level might rise, fall, or stay the same. In the long-run, real GDP will rise and the price level might rise, fall, or stay the same.

• b. the price level will fall, and real GDP might rise, fall, or stay the same. In the long-run, real GDP and the price level will be unaffected.

• c. the price level will rise, and real GDP might rise, fall, or stay the same. In the long run, real GDP will rise and the price level will fall.

• d. the price level will fall, and real GDP might rise, fall, or stay the same. In the long run, real GDP will rise and the price level will fall.

QN=303 (18024) Other things the same, when the price level rises, interest rates

• a. rise, which means consumers will want to spend more on homebuilding.

• b. rise, which means consumers will want to spend less on homebuilding.

• c. fall, which means consumers will want to spend more on homebuilding.

• d. fall, which means consumers will want to spend less on homebuilding.

QN=304 (18035) Changes in the price of oil.

• a. can only lead to recessions

• b. have not contributed much to output fluctuations in the United States.

• c. change the economy principally by changing aggregate demand.

• d. created both inflation and recession in the United States in the 1970s.

QN=305 (18036) The classical dichotomy refers to the separation of

• a. variables that move with the business cycle and variables that do not.

• b. changes in money and changes in government expenditures.

• c. decisions made by the public and decisions made by the government.

• d. real and nominal variables.

QN=306 (18032) Suppose the economy is in long-run equilibrium. If there is a tax cut at the same time that major new sources of oil are discovered in the country, then in the short-run

• a. real GDP will rise and the price level might rise, fall, or stay the same.

• b. real GDP will fall and the price level might rise, fall, or stay the same.

• c. the price level will rise, and real GDP might rise, fall, or stay the same.

• d. the price level will fall, and real GDP might rise, fall, or stay the same.

QN=307 (18041) From 2001 to 2005 there was a dramatic rise in the price of houses. If this made people feel wealthier, then it would shift

• a. aggregate demand right.

• b. aggregate demand left

• c. aggregate supply right.

• d. aggregate supply left.

QN=308 (18023) The aggregate-demand curve

• a. (i) has a slope that is explained in the same way as the slope of the demand curve for a particular product.

• b. (ii) is vertical in the long run.

• c. (iii) shows an inverse relation between the price level and the quantity of all goods and services demanded.

• d. All of (i), (ii), and (iii) are correct.

QN=309 (18017) The model of short-run economic fluctuations focuses on the price level and.

• a. (i) real GDP

• b. (ii) economic growth.

• c. (iii) the neutrality of money.

• d. None of (i), (ii), and (iii) is correct.

QN=310 (18034) The long-run aggregate supply curve would shift right if immigration from abroad

• a. increased or Congress made a substantial increase in the minimum wage.

• b. decreased or Congress abolished the minimum wage.

• c. increased or Congress abolished the minimum wage.

• d. decreased or Congress made a substantial increase in the minimum wage.

QN=311 (18026) Other things the same, as the price level decreases it induces greater spending on.

• a. both net exports and investment.

• b. net exports but not investment

• c. investment but not net exports.

• d. neither net exports nor investment.