- Which of the following best describes why the
aggregate supply curve is horizontal over a certain
range?
A. Higher price levels lead to higher interest
rates.
B. Changes in the aggregate price level do not
induce substitution.
C. Output cannot increase unless the price level
and interest rates increase.
D. Rigid prices prevent employment from
fluctuating.
E. Resources are underemployed in the
economy; an increase in spending can occur
without any price level pressure. - Which of the following would be an appropriate
combination of fiscal and monetary policy?
A. An increase in the reserve requirement and a
decrease in taxes
B. A decrease in government spending and a
decrease in the reserve requirement
C. The purchase of open-market securities and
an increase in government spending
D. The purchase of open-market securities and a
decrease in government spending
E. A decrease in spending and an increase in
taxes - What does a Phillips Curve illustrate?
A. Unemployment and inflation
B. Unemployment and government spending
C. Inflation and government spending
D. Price level and aggregate demand
E. Aggregate demand and aggregate supply - Which of the following could cause a simultaneous
increase in inflation and unemployment?
A. A decrease in government spending
B. A decrease in the money supply
C. A decrease in the velocity of money
D. An increase in inflationary expectations
E. An increase in the overall level of productivity - What will an increase in U.S. imports do?
A. Cause the dollar to appreciate
B. Cause the dollar to depreciate
C. Cause no change in the value of the dollar
D. Cause the price level to rise
E. Cause the price level to fall- Which of the following would increase the
standard of living in an economy?
A. An increase in taxes
B. An increase in the number of banks
C. An increase in federal regulations
D. An increase in labor productivity
E. An increase in the labor force - Which of the following could shift the long-run
aggregate supply curve to the right?
A. An increase in the price of product resources
B. An increase in productivity
C. An increase in the federal budget deficit
D. A decrease in the money supply
E. A decrease in the labor force - What does the CPI measure?
A. Unemployment
B. Price level
C. A change in the price of heavy machinery
D. Taxation
E. Government spending - If the economy is currently experiencing full
employment, which of the following must be true?
A. There is zero unemployment.
B. There is only cyclical unemployment.
C. There is equilibrium with imports and exports.
D. There is frictional unemployment.
E. There is a high level of inflation. - A classical economist would support which of the
following?
A. Saving should be greater than investment.
B. The economy can be in equilibrium even
though it is not experiencing full employment.
C. Inflation is not a serious economic problem.
D. Prices of products are inflexible.
E. The economy self-corrects itself when
disequilibrium is reached. - If the government decides to decrease spending,
which of the following is most likely to occur?
A. An increase in aggregate demand
B. An increase in output
C. A decrease in aggregate consumption
D. A decrease in aggregate supply
E. An increase in taxes
Macroeconomics Full-Length Practice Test 2Macroeconomics Full-Length
Practice Test 2
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