Macroeconomics Q&A

Macroeconomics Q&A

According to which of the following models is there no built-in mechanism which will automatically bring the economy back to full employment?

Basic Keynesian model

An increase in capital formation that expands long-run aggregate supply will

• increase output and
• decrease prices.

An increase in the long-run aggregate supply curve indicates that

potential real GDP has increased.

An anticipated change is an economic occurrence that

is foreseen by most economic participants.

Controlling the money supply to achieve desired macroeconomic goals is called

monetary policy.

If resource prices are fixed and the product selling price rises, then

profits will increase.

In the foreign exchange market, the price of one nation's currency in terms of the currency of another nation is known as the

exchange rate.

If the value of a nation's imports exceeds exports, the nation has a

trade deficit.

If a currency depreciates, a country's net exports

rise and AD increases.

If European economies experience strong economic growth, U.S. net exports will

This question appears to be incomplete. Please provide the complete question.

If the countries we trade with go into severe recessions and, as a result, their real income levels decline, in the short run we can expect

a decrease in aggregate demand.

In the Classical model, an increase in aggregate demand will cause

national output to be unaffected but prices to increase.

If a U.S. dollar exchanges for 10 Mexican Pesos, the dollar price of a Peso is

10 cents.

Other things the same, an increase in the price level makes the dollars people hold worth

less, so they are willing to spend less.

The actions of borrowers and lenders are coordinated by

the interest rate in the loanable funds market.

The market for labor services is included in the

resource market.

The portion of after-tax income a consumer does not spend on consumption is called

saving.

The use of government taxation and expenditures to achieve macroeconomic goals is called

fiscal policy.

People anticipate inflation will be 3 percent during the next several years. If this is true, when the real interest rate is 4 percent, the money interest rate will be

7 percent.

The price that a person must pay in order acquire purchasing power now rather than in the future is called

the interest rate.

The difference between the money interest rate and the real interest rate is the

inflationary premium.

The basic Keynesian model

implies that an increase in aggregate demand will often lead to an increase in GDP.

The standard AD-AS model of the economy assumes that

input prices are fixed in the short run.

The long-run effects of finding additional natural resources would include

lower prices.

Which of the following basic economic concepts most clearly provides the foundation for the long-run aggregate supply curve?

The production possibilities curve

Which of the following equations is accurate?

Real interest rate = money interest rate - inflationary premium

Which of the following will reduce aggregate demand?

Lower real incomes of the country's foreign trade partners

Which of the following is most likely to accompany an unanticipated increase in short-run aggregate supply?

An increase in real GDP

Which of the following will most likely increase short-run aggregate supply?

A reduction in resource prices

Which of the following is the primary factor that coordinates the actions of borrowers and lenders in the loanable funds market?

Interest rate

Which of the following groups would most likely benefit from unanticipated inflation?

Borrowers

When the actual GDP equals the full-employment level of GDP, the

economy is in long-run equilibrium.

Which of the following events would not shift the aggregate demand?

A decrease in the price level

. You just bought a $1,000 bond that is scheduled to mature in ten years. If interest rates rise during the next six months, the market value (or price) of your bond will

Decrease