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5 Written questions

5 Matching questions

  1. Producer surplus
  2. High and variable inflation
  3. Structual Unemployment
  4. New classical view of fiscal policy
  5. Long run aggregate supply curve
  1. a -reduces investment
    -distorts the information delivered by prices
    -results in less productive use of resources
  2. b vertical because in the long run peple have had time to adjust and so a higher price level will increase costs as much as it increases revenues
    -indicates potential output (Y) of economy
  3. c due to structural characteristics of the economy that prevent the matching of available jobs with available workers
  4. d -the difference between price producers are willing to accept and price they actually receive
    -area above the supply but below the price
  5. e New classical economists do not believe that budget deficits will stimulate additional consumption and aggregate demand
    -people will save for the expected future tax increase (permanent income hypothesis)

5 Multiple choice questions

  1. when many people drastically increase their savings and reduce consumption, total savings may decrease
  2. -total market value of all final goods and services produced by the citizens of a country
    -counts income that americans earn abroad
    -ignores the income foreigners earn in the U.S.
  3. the practice of trading votes by a politician to get the necessary support to pass desired legislation
  4. indicates the inverse relationship between the interest rate and the quantity of money people want to hold.
    -downward sloping because as the interest rate increases, people will hold less money
  5. -reveals the cost durings the current period of purchasing the items included in GDP relative to the cost during the base year
    -includes capital goods and other goods purchased by businesses and government
    -(Normal GDP x GDP deflator / GDP deflator)

5 True/False questions

  1. M2Currency + checkable deposits + travelers checks

          

  2. Expenditure Multiplier-the difference between price producers are willing to accept and price they actually receive
    -area above the supply but below the price

          

  3. Employed personActively seeking employment (in last 4 weeks) or waiting to start or return to a job

          

  4. Nominal Interest ratepercentage of the amount borrowed that must be paid to the lender in addition to the repayment of the principle.

          

  5. Keynesian Economistexpansionary fiscal policy during a recession will stimulate aggregate demand and pull us out of a recession.
    -Prices are sticky, Economy can't correct itself, Demand creates supply

          

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