- •The International College of Economics and Finance macroeconomics Mock Exam April 8, 2005
- •Labor supply
- •Money supply growth
- •(C) Calculate value added at each stage of production
- •Consumption Expenditures Investment Unemployment
- •An increase in output and either increase or decrease in tax receipts;
- •Transactions costs
- •Interest rates Unemployment
- •Decreases production.
- •An increase in the availability of education and training
- •Resources are underemployed and an increase in demand will be satisfied without any pressure on the price level
- •Output and the price level are unchanged from their initial values.
- •Causes higher interest rates, which change the composition of output
- •Saving.
- •Investment.
- •No change in the level of saving
- •Changes in net tax revenues that are the result of a change in the level of economic activity
- •The provision of loans will rise by 400 million dollars.
- •I, II, and III only
- •The total amount of loans made by commercial banks will decrease
Interest rates Unemployment
(A) Increase Might either increase or decrease
(B) Increase Decrease
(C) Decrease Might either increase or decrease
(D) Might either increase or decrease Decrease
(E) Might either increase or decrease Increase
If the public's demand for currency decreased relative to its demand for deposits, the:
(A) Reserve requirement ratio would decrease.
(B) Currency-deposit ratio would increase.
(C) Reserve-deposit ratio would increase.
(D) Money multiplier would increase.
(E) Money multiplier would decrease.
When the Central Bank makes an open-market sale, it:
(A) Increases the money multiplier.
(B) Increases the currency to deposit ratio.
(C) Increases the monetary base.
(D) Decreases the monetary base.
(E) Decreases the money multiplier.
Which of the following policy combinations is most likely to cure a severe recession?
Open-Market Operations Taxes Discount Rate
(A) Buy securities Increase Decrease
(B) Buy securities Decrease Decrease
(C) Buy securities Decrease Increase
(D) Sell securities Decrease Decrease
(E) Sell securities Increase Increase
The aggregate demand curve is
(A) A horizontal summation of market demand curves
(B) A horizontal summation of firm demand curves
(C) A simple aggregation of demand curves for individual goods
(D) A vertical summation of firm demand curves
(E) Not found by adding product demand curves horizontally or vertically
Which of the following will cause the aggregate demand curve to shift to the left?
(A) Expectations of deficit of goods in the future
(B) A decrease in income taxes
(C) An increase in government spending
(D) A decrease in foreign income
(E) An expected inflation
According to the imperfect-information model, when the price level falls and the producer did not expect it to fall, the producer:
Increases production.
Does not change production.
Decreases production.
Hires more workers.
Decreases nominal wages.
Which of the following will shift the aggregate supply curve to the right?
A successful wage push by workers
Expectations of a higher aggregate price level
An increase in the availability of education and training
An increase in the money supply
All of the above
An aggregate supply curve may be horizontal over some range because within this range
A higher price leads to higher interest rates, which reduce the money supply and consumer spending
Changes in aggregate price level do not induce substitution
Output can not be increased unless prices and wages increase
Resources are underemployed and an increase in demand will be satisfied without any pressure on the price level
Rigid prices prevent employment from fluctuating
Suppose the economy is initially in long-run equilibrium. Then suppose there is a drought that destroys much of the wheat crop. If the policymakers allow the economy to adjust to long-run equilibrium on its own, according to the model of aggregate demand and aggregate supply, what happens to prices and output in the long run?