Unit 5 Quiz

The long run Philips Curve is:

• the same as the short run Philips curve

• negatively sloping, showing an inverse relationship between unemployment and inflation

• vertical at the NAIRU

• vertical but unrelated to NAIRU

• positively sloped, showing a direct relationship between unemployment and inflation

If an increase in government spending, financed by borrowing, crowded out an equal amount of private spending, which of the following would result?

• Interest rates would decrease.

• Aggregate demand would remain unchanged.

• The price level would increase.

• Unemployment would increase.

• Maybe next time I will do the classwork IN class..

An increase in government spending financed by borrowing will result in which of the following?

• Wish I did my AP classroom MCs

• The real interest rate will decrease in the short run

• Interest-sensitive private sector spending will increase in the short run.

• Potential real output will increase in the long run.

• The rate of physical capital accumulation will decrease in the long run.

An increase in the level of business optimism will generally:

• not change the loanable funds demand curve

• shift the loanable funds demand curve to the left

• cause a movement down the loanable funds demand curve

• shift the loanable funds demand curve to the right

• the supply of loanable funds to increase

An increase in the supply for loanable funds would most likely be caused by a(n):

• decrease in the market interest rate

• decrease in corporate income tax rates

• decrease in the amount of government borrowing

• increase in the amount of expected business opportunities

• increase in private savings

The budget balance is calculated as: Mark only one oval.

• T - G /TR

• T x G - TR

• T - (G + TR)

• T + G + TR

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The Short run Philips Curve is: Mark only one oval.

• the same as the long run Philips curve

• negatively sloping, showing an inverse relationship between unemployment and inflation

• vertical at the NAIRU

• vertical but unrelated to NAIRU

• positively sloped, showing a direct relationship between unemployment and inflation

If workers expect a lower rate of inflation, the short run Phillips curve will: Mark only one oval.

• movement down the curve

• unaffected

• shift up (right)

• shift down (left)

• movement up the curve

If there is an increase in oil prices in the economy (a major input), the short run Phillips curve will: Mark only one oval.

• movement down the curve

• unaffected

• shift up (right)

• shift down (left)

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If the Government decreases taxes for consumers in the economy, what change will happen to the Phillips curve?

• movement down the curve

• unaffected

• shift up (right)

• shift down (left)

• movement up the curve