ECO 13

QN=327 (18019) The classical dichotomy and monetary neutrality are represented graphically by

• a. an upward-sloping long-run aggregate-supply curve.

• b. a vertical long-run aggregate-supply curve.

• c. an upward-sloping short-run aggregate-curve.

• d. a downward-sloping aggregate-demand curve.

QN=328 (18068) According to liquidity preference theory, equilibrium in the money market is achieved by adjustments in..

• a. the price level.

• b. the interest rate

• c. the exchange rate

• d. real wealth.

QN=329 (18058) Permanent tax cuts shift the AD curve

• a. farther to the right than do temporary tax cuts.

• b. not as far to the right as do temporary tax cuts.

• c. farther to the left than do temporary tax cuts.

• d. not as far to the left as do temporary tax cuts.

QN=330 (18050) During periods of expansion, automatic stabilizers cause government expenditures

• a. and taxes to fall.

• b. and taxes to rise.

• c. to rise and taxes to fall.

• d. to fall and taxes to rise.

QN=331 (18054) Which of the following properly describes the interest-rate effect that helps explain the slope of the aggregate-demand curve?

• a. As the money supply increases, the interest rate falls, so spending rises.

• b. As the money supply increases, the interest rate rises, so spending falls.

• c. As the price level increases, the interest rate falls, so spending rises.

• d. As the price level increases, the interest rate rises, so spending falls.

QN=332 (18056) The theory of liquidity preference assumes that the nominal supply of money is determined by the.

• a. level of real output only.

• b. interest rate only

• .c. level of real output and by the interest rate

• d. Federal Reserve.

QN=333 (18060) Other things the same, automatic stabilizers tend to

• a. raise expenditures during expansions and recessions.

• b. lower expenditures during expansions and recessions.

• c. raise expenditures during recessions and lower expenditures during expansions.

• d. raise expenditures during expansions and lower expenditures during recessions.

QN=334 (18064) Assume the MPC is 0.75. Assuming only the multiplier effect matters, a decrease in government purchases of $100 billion will shift the aggregate demand curve to the

• a. (i) left by $200 billion.

• b. (ii) left by $400 billion.

• c. (iii) right by $800 billion.

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

QN=335 (18059) A reduction in U.S net exports would shift U.S. aggregate demand

• a. rightward. In an attempt to stabilize the economy, the government could raise taxes.

• b. rightward. In an attempt to stabilize the economy, the government could cut taxes.

• c. leftward. In an attempt to stabilize the economy, the government could raise taxes.d. leftwar

• d. In an attempt to stabilize the economy, the government could cut taxes.

QN=336 (18070) People are likely to want to hold more money if the interest rate

• a. increases, making the opportunity cost of holding money rise.

• b. increases, making the opportunity cost of holding money fall.

• c. decreases, making the opportunity cost of holding money rise.

• d. decreases, making the opportunity cost of holding money fall.