Macroeconomics 1104 Self Quiz Unit 3 & 4 PDF

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Summary

I hope these 2 self-quizzes for units 3 and 4 will assist the students to know and understand the work that was done in the first two weeks....

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Which of the following best explains the multiplier effect as a result of a $100 million increase in government spending on highways? Select one: a. To fund the government spending, more money must be printed. The resulting increase in money supply lowers interest rates which in turn stimulates consumption and investment spending. b. The initial change in spending will cause an increase in real GDP and it also becomes income to someone else. As a result, the government’s tax revenue increases which in turn allows the government to further increase its spending. c. The government spending creates a demand for domestically produced goods and services which in turn increases income and higher incomes will lead to increased consumption. d. The initial change in government spending creates a supply of jobs and stimulates production of domestically produced goods and services. The resulting increases in wages and investment demand leads to increased real GDP. Feedback The correct answer is: The government spending creates a demand for domestically produced goods and services which in turn increases income and higher incomes will lead to increased consumption.

Question 2 Correct Mark 1.00 out of 1.00

Flag question Question text The economy’s potential output corresponds to the level of Select one: a.

natural employment. b. frictional unemployment. c. structural unemployment. d. cyclical unemployment. Feedback The correct answer is: natural employment.

Question 3 Correct Mark 1.00 out of 1.00

Flag question Question text In the long run, an increase in aggregate demand, all other things unchanged, will cause the price level to Select one: a. increase and potential output to increase. b. decrease and potential output to decrease. c. increase and potential output to remain stable. d. decrease and potential output to remain stable. Feedback

The correct answer is: increase and potential output to remain stable.

Question 4 Correct Mark 1.00 out of 1.00

Flag question Question text Disposable personal income is Select one: a. the income households receive after paying personal taxes and personal debt. b. the income households earn from supplying labor services for the production of aggregate output. c. the income households receive after paying personal taxes. d. the income households have leftover after paying personal taxes and purchasing necessities. Feedback The correct answer is: the income households receive after paying personal taxes.

Question 5 Correct Mark 1.00 out of 1.00

Flag question

Question text An upward shift in the consumption function can be caused by Select one: a. expectations of product shortages. b. expectations of less income in the future. c. a decrease in consumer confidence. d. a reduction in the wealth of households. Feedback The correct answer is: expectations of product shortages.

Question 6 Correct Mark 1.00 out of 1.00

Flag question Question text Wage and price stickiness Select one: a. gives rise to a vertical long-run aggregate supply curve. b. gives rise to a vertical short-run aggregate supply curve. c. creates a surplus or a shortage of real GDP.

d. prevents the economy from producing its potential level of real GDP. Feedback The correct answer is: prevents the economy from producing its potential level of real GDP.

Question 7 Correct Mark 1.00 out of 1.00

Flag question Question text The consumption function shows Select one: a. the amount of consumption at each level of aggregate demand, holding all other determinants constant. b. the amount of consumption at each price level, holding all other determinants constant. c. the amount of consumption at each level of disposable income, holding all other determinants constant. d. the amount of consumption at each wage rate holding all other determinants constant. Feedback The correct answer is: the amount of consumption at each level of disposable income, holding all other determinants constant.

Question 8

Correct Mark 1.00 out of 1.00

Flag question Question text A graph that depicts the relationship between the total quantity of goods and services demanded and the price level is the Select one: a. aggregate demand curve. b. average price level. c. circular flow model. d. GDP curve. Feedback The correct answer is: aggregate demand curve.

Question 9 Correct Mark 1.00 out of 1.00

Flag question Question text The short run in macroeconomic analysis is a period Select one:

a. in which wages and some other prices do not respond to changes in economic conditions. b. in which full wage and price flexibility and market adjustment have been achieved. c. of less than 12 months. d. in which all macroeconomic variables are fixed. Feedback The correct answer is: in which wages and some other prices do not respond to changes in economic conditions.

Question 10 Correct Mark 1.00 out of 1.00

Flag question Question text Suppose net exports decreases by $100 million due to a slump in foreign economies. If the value of the multiplier is 2, what happens to the domestic aggregate demand curve? Select one: a. Since less will be produced, the aggregate demand does not shift. The aggregate supply curve shifts to the left by $100 million at each price level. b. It shifts to the left by $50 million at each price level. c. It shifts to the left by $100 million at each price level.

d. It shifts to the left by $200 million at each price level. Feedback The correct answer is: It shifts to the left by $200 million at each price level....