Starting from a position of macroeconomic equilibrium at below the full-employment level of real GDP, an increase in the money supply will:
a. raise interest rates, prices, and reduce real GDP.
b. raise interest rates, lower prices, and leave real GDP unchanged.
c. raise interest rates, lower prices, and leave real GDP unchanged.
d. lower interest rates, raise prices, and increase real GDP.
QUESTION 2If a sizable number of workers were switched from full-time to half-time employment, then the official unemployment rate would:
a. rise.
b. fall.
c. remain unchanged.
d. react unpredictably.
QUESTION 3A balanced budget is present when:
a. the economy is at full employment.
b. the actual level of aggregate spending equals the planned level of spending.
c. public sector spending equals private sector spending.
d. government revenues equal government expenditures.
QUESTION 4If the Fed reduces the discount rate, which of the following are most likely to result?
a. The money supply curve shifts rightward, and the equilibrium interest rate falls in the money market.
b. Investment declines, causing the aggregate demand curve to shift leftward, reducing equilibrium real GDP and thus slowing the economy.
c. Investment rises, causing the aggregate demand curve to shift rightward, increasing equilibrium real GDP and thus accelerating the economy.
d. Both a. and b. above are correct.
e. Both a. and c. above are correct.
QUESTION 5Which of the following people would be officially counted as unemployed?
a. A person who works only 5 hours per week for pay.
b. A full-time college student who chooses not to have a paying job.
c. A family member who works 20 hours per week without pay.
d. A jobless high-school graduate who is actively looking for work.
QUESTION 6Which of the following is an example of expansionary fiscal policy?
a. Increase taxes.
b. Decrease government spending.
c. Increase government spending.
d. Increase taxes and decrease government spending equally.
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