Assuming that as a result of observed past increases in the aggregate price level, workers' expectation of the current price level rises. Then,
a. less labor will be supplied at each money wage because with the higher expectation about the aggregate price level since a given money wage corresponds to a lower real wage.
b. the firm has to pay a higher money wage in order to obtain a given quantity of labor.
c. more labor will be supplied at each money wage because with the higher expectation about the aggregate price level since a given money wage corresponds to a higher real wage.
d. Both a and b
e. Both b and c
Question 2Under the new Constitution in 1789, the states gained the sovereign power to
(a) levy taxes.
(b) power and issue money.
(c) regulate the value of money.
(d) create corporations by special franchise.
Question 3Currently, virtually the entire deficit in the U.S. is
a. cyclical.
b. structural.
c. transitional.
d. frictional.
Question 4World trade and tariffs have been regulated by the International Trade Organization (ITO), General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO).
Today, only the ITO still exists to address international trade issues and monitor the implementation of any trade agreements negotiated in the Uruguay Round of world trade talks. Indicate whether the statement is true or false
Question 5Which of the following models argue that active stabilization policy can be beneficial?
a. The classicists
b. The new classicists
c. The monetarists
d. The real business cycle theorists
e. None of the above
Question 6Which of the following statements is correct?
a. It is monetary policy and not tax policy that influences interest rates.
b. Tax reductions play little role in influencing output.
c. Marginal tax rates today are lower than they have ever been in U.S. history.
d. Budget deficits show little correlation with interest rates.
e. None of the above.
Question 7To understand how the colonial economy developed, Hughes and Cain (2011) claim one must understand
(a) what motivated colonists to settle in different locations.
(b) what colonists produced, how much they produced, for whom they
produced and with whom they traded.
(c) the legal system in which they operated.
(d) all of the above.
Question 8During the Great Depression we observed:
a. higher prices.
b. higher real wages.
c. lower output.
d. higher money wages.
e. both b and d.
Question 9Forcing businesses to divert profits to improve job conditions, increase wages and salaries and broaden benefits fuels animosity toward labor unions.
Indicate whether the statement is true or false
Question 10A change in government spending has a larger effect on income the
a. larger the elasticity of money demand.
b. smaller the elasticity of money demand.
c. steeper the LM curve.
d. flatter the LM curve.
Question 11Which of the following statements is correct?
a. In both the Keynesian and classical systems, aggregate demand is an important determinant of output and employment
b. In classical and monetarist models, money is the primary factor determining changes in aggregate demand.
c. Aggregate demand in the Keynesian model is determined entirely by the quantity of money, whereas in the classical model, money is one of several factors determining aggregate demand
d. None of the above
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