If the demand curve is perfectly elastic, then an increase in supply will:

If the demand curve is perfectly elastic, then an increase in supply will:
 a. increase both the price and the quantity exchanged.
 b. increase the price but result in no change in the quantity exchanged.
  c. increase the quantity exchanged but result in no change in the price.
  d. decrease the price but result in no change in the quantity exchanged.

Question 2

What are the inherent disadvantages of a barter system?

Question 3

Which of the following statements accurately expresses the assumptions on which new Keynesian and new classical theory are based?
 a. New Keynesian economics assumes that the economy can reach equilibrium below thenatural rate of unemployment, whereas new classical economics assumes thatmacroeconomic equilibrium is always at the natural rate of unemployment.
 b. New Keynesian economics maintains that government intervention is unnecessary,whereas classical economics supports an active government role.
 c. New Keynesian economics assumes that the long-run Phillips curve is vertical,whereas new classical economics views the long-run Phillips curve as horizontal.
 d. New Keynesian economics assumes that all prices are flexible, whereas new classical economics applies a fixed-price model.
  e. New Keynesian economics emphasizes short-run reductions in inflation rates, whereas new classical economics focuses on short-run reductions in the unemployment rate.

Question 4

If the supply curve is perfectly elastic, then an increase in demand will:
 a. increase both the price and the quantity exchanged.
 b. increase the price but result in no change in the quantity exchanged.
  c. increase the quantity exchanged but result in no change in the price.
  d. decrease the price but not change the quantity exchanged.

Question 5

Why is the money multiplier considered to be a potential multiplier rather than an indication of exactly how much multiplication should be expected?

Question 6

An economist from which school of thought would most likely accept the following- The wide acceptance and practice of activist government fiscal policy..
 a. Traditional classical economics
  b. Neoclassical economics
  c. Marxist economics
  d. New monetarist economics
  e. Keynesian economics

Question 7

Put the following products in order from the least to the most elastic demand: Domino's pizza, pizza, and pizza from Domino's on the corner of Main Street and 8th Avenue.
 a. Domino's pizza; pizza; pizza from Domino's on the corner of Main Street and 8th Avenue
  b. pizza; pizza from Domino's on the corner of Main Street and 8th Avenue; Domino's pizza
  c. pizza; Domino's pizza; pizza from Domino's on the corner of Main Street and 8th Avenue
  d. pizza from Domino's on the corner of Main Street and 8th Avenue; Domino's pizza; pizza

Question 8

What is fiat money? Why is fiat money important in the United States today?

Question 9

The economic theory that suggested an alternative to the rising unemployment and inflation that the static Phillips curve analysis could not explain was the:
 a. new classical economic theory.
  b. monetarist economic theory.
  c. new Keynesian economic theory.
  d. classical economic theory.
  e. traditional Keynesian economic theory.

Question 10

Elasticity of demand will ____ as the availability of substitutes ____.
 a. increase; decreases
 b. decrease; increases
 c. increase; increases
 d. remain unchanged; decreases

Question 11

Which of the following was a cause of the savings and loan crisis that occurred in the 1980s?
 a. the increasing rates of inflation throughout the 1970s
 b. savings and loans investing in high-risk ventures including real estate projects
  c. government deregulation in the 1980s
 d. all of the above

Question 12

Which of the following is the basic tenet of new classical economics?
 a. A change in the fiscal policy affects the equilibrium level of real GDP but has no impact on the equilibrium price level.
  b. A government-induced shift in aggregate demand affects the real GDP only if they are expected by the economic agents.
  c. A change in aggregate demand affects the aggregate price level only if the aggregate supply curve is perfectly elastic.
  d. A change in monetary policy affects the equilibrium level of real GDP only if those changes are unexpected.
  e. An expected change in a monetary or fiscal policy leads to a proportional shift of the long run supply curve.