Monetary policy designed to offset an inflationary gap would:
a. Increase interest rates and increase aggregate demand.
b. Increase interest rates and decrease aggregate demand.
c. Decrease interest rates and increase aggregate demand
d. Decrease interest rates and decrease aggregate demand.
Question 2Suppose that an economy grows by 6 percent, total factor productivity grows by 4 percent, and the capital stock increases by 2 percent. If labor and capital are the only inputs used in production, and capital contributes 25 percent to GDP, then the labor force has risen by _____.
a. 1.5
b. 2
c. 4
d. 6
e. 8
Question 3If two goods both had positive cross elasticities and positive income elasticities,
a. they are both normal and substitutes for one another.
b. they are both normal and complements for one another.
c. they are both inferior and substitutes for one another.
d. they are both inferior and complements for one another.
Question 4Other things equal, in an open economy, monetary policy to offset a contractionary gap will tend to
a. Lower the exchange value of the dollar and lower net exports.
b. Lower the exchange value of the dollar and raise net exports.
c. Raise the exchange value of the dollar and lower net exports.
d. Raise the exchange value of the dollar and raise net exports.
Question 5If the growth rate of resources is zero and real output is growing at 4 percent, then _____.
a. the stock of capital has fallen by 4 percent
b. economic growth has fallen by 4 percent
c. total factor productivity has risen by 4 percent
d. the stock of labor has fallen by 4 percent
e. the percentage share of real GDP received by capital has fallen by 4 percent
Question 6If the elasticity of supply coefficient for a good is 6, we know:
a. that for every 1 increase in quantity, there will be a 6 increase in price.
b. that for every 1 increase in quantity, there will be a 6 decrease in price.
c. that for every 6 increase in quantity, there will be a 1 increase in price.
d. that for every 6 increase in quantity, there will be a 1 decrease in price.
Question 7Other things equal, monetary policy to offset a contractionary gap will tend to
a. Increase the money supply and lower interest rates
b. Increase the money supply and increase interest rates
c. Decrease the money supply and lower interest rates
d. Decrease the money supply and increase interest rates
Question 8Growth in total factor productivity equals the _____.
a. sum of resource growth and economic growth
b. ratio of total output to total input
c. ratio of total input to total output
d. percentage change in per capita real GDP
e. percentage change in output minus the percentage change in resources
Question 9If a price decrease leads to an increase in total revenue, demand must be:
a. perfectly inelastic.
b. relatively inelastic.
c. relatively elastic.
d. unit elastic.
Question 10When the money supply decreases, other things being equal,
a. real interest rates fall and investment spending rises.
b. real interest rates fall and investment spending falls.
c. real interest rates rise and investment spending falls.
d. real interest rates rise and investment spending rises.
Quick Reply
