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ECON 103 Exam#2

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ECON 103 Quiz on ECON 103 Exam#2, created by Natalie Balzert on 07/11/2016.
Natalie Balzert
Quiz by Natalie Balzert, updated more than 1 year ago
Natalie Balzert
Created by Natalie Balzert about 8 years ago
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Resource summary

Question 1

Question
Aggregate Supply represents:
Answer
  • total expenditure in the economy
  • total production in the economy
  • total of all wages paid in the economy
  • a and b only
  • a, b, and c

Question 2

Question
Two other names for the LRAS is [blank_start]Natural Real GDP[blank_end], [blank_start]Full Employment Real GDP[blank_end].
Answer
  • Natural Real GDP
  • Full Employment Real GDP

Question 3

Question
An oil price decrease in the US should shift:
Answer
  • aggregate demand to the left
  • aggregate supply to the left
  • aggregate demand to the right
  • aggregate supply to the right

Question 4

Question
An oil price decrease in the US should increase prices and lower Real GPD.
Answer
  • True
  • False

Question 5

Question
An increase in the money supply would shift:
Answer
  • aggregate demand to the left
  • aggregate supply to the left
  • aggregate demand to the right
  • aggregate supply to the right

Question 6

Question
A government budget cut would shift:
Answer
  • aggregate demand to the left
  • aggregate supply to the left
  • aggregate demand to the right
  • aggregate supply yo the right

Question 7

Question
A government budget cut would:
Answer
  • increase prices and lower Real GDP
  • increase prices and raise Real GDP
  • decrease prices and lower Real GDP
  • decease prices and raise Real GDP

Question 8

Question
An increase in US imports would:
Answer
  • increase prices and lower Real GDP
  • Increase prices and raise Real GDP
  • decrease prices and lower Real GDP
  • decrease prices and raise Real GDP

Question 9

Question
In a Classical view of the world, what factor makes savings equal to investment?
Answer
  • wages
  • interest rates
  • neither a or b
  • a and b together

Question 10

Question
Classical economists believe the government never should try to balance the economy, it is better left alone.
Answer
  • True
  • False

Question 11

Question
Say's Law is:
Answer
  • good money drives bad money out of the circulation
  • production creates the income necessary to buy everything produced
  • prices must adjust so that all goods produced are sold
  • equilibrium always exists

Question 12

Question
Classical economists believe that in the long run, whether or not there is unemployment is determined solely by aggregate supply, not aggregate demand.
Answer
  • True
  • False

Question 13

Question
If my wage was $10 per hour and bread cost $2.50 per loaf last month and this month my wage is $9 per month and bread costs $3 per loaf, my nominal wage has fallen and my real wage has risen.
Answer
  • True
  • False

Question 14

Question
[blank_start]Thomas Malthus[blank_end] was the person who believed that population growth would outpace the food supply.
Answer
  • Thomas Malthus

Question 15

Question
A recessionary gap would be eliminated, according to Classical economists:
Answer
  • only through government spending and taxing changes
  • because wages fall, without any government spending action
  • because wages fall, caused by actions of the government
  • because wages rise, without any government action

Question 16

Question
Classical economists believed the economy would reach a "stationary state" in the long run.
Answer
  • True
  • False

Question 17

Question
Classical economics is based on the concept that markets always give the correct price and that they move to that price quickly.
Answer
  • True
  • False

Question 18

Question
Suppose my income this month is $8,000 and I spent $7,000, and last month my income was $6,000 and I spent $6,000. What is my MPC? My MPC is [blank_start]0.5[blank_end].
Answer
  • 0.5

Question 19

Question
If my MPC is what you calculated previously, a &50 billion increase in government spending would cuase how big a change in GDP? $ [blank_start]100[blank_end] B.
Answer
  • 100

Question 20

Question
A recessionary gap would be eliminated, according to Keynesian economists:
Answer
  • only though government action
  • because wages fall, without any government action
  • because wages fall, caused by actions of the government
  • because wages rise, without any government action

Question 21

Question
To Keynes, the most common cause of recessions is not enough:
Answer
  • consumption
  • investment
  • savings
  • prices

Question 22

Question
According to Keynes, in the long run we are all [blank_start]dead[blank_end].
Answer
  • dead

Question 23

Question
According to Keynes, the most important determinant of investment is [blank_start]expectations[blank_end].
Answer
  • expectations

Question 24

Question
Keynes' other expression for the previous answer is [blank_start]Animal Spirit[blank_end].
Answer
  • Animal Spirit

Question 25

Question
In Keynes' view, savings and investment do not have to be equal, where in the Classical view they always were.
Answer
  • True
  • False

Question 26

Question
Keynes believed the Great Depression came about because:
Answer
  • wages did not fall far enough
  • wages did not fall fast enough
  • wages fell, but prices didn't
  • none of the above

Question 27

Question
Keynes' theory is based primarily around:
Answer
  • aggregate demand
  • aggregate supply
  • using both aggregate demand and aggregate supply together
  • 2:30 in the afternoon

Question 28

Question
According to Keynes, the most important determinant of savings is [blank_start]income[blank_end].
Answer
  • income

Question 29

Question
According to the Classical Theory, savings and investments are determined by [blank_start]interest rates[blank_end].
Answer
  • interest rates

Question 30

Question
[blank_start]Arthur Laffer[blank_end] is the person who is thought of as the creator of supply side economics.
Answer
  • Arthur Laffer

Question 31

Question
According to supply side theory, the Reagan and Bush tax cuts which targeted the rich will [blank_start]trickle down[blank_end] to the poor and middle class, helping everyone eventually.
Answer
  • trickle down

Question 32

Question
One legacy of supply side economics is that we now care anout what variable in macroeconomics that we did not before?
Answer
  • investment
  • nominal wages
  • worker productivity
  • taxes

Question 33

Question
According to your professor, John Lennon was killed by [blank_start]income taxes[blank_end].
Answer
  • income taxes

Question 34

Question
The equation of exchange is [blank_start]MV[blank_end] = [blank_start]PQ[blank_end].
Answer
  • MV
  • PQ

Question 35

Question
[blank_start]Milton Friedman[blank_end] is the person we associate with this equation in modern times.
Answer
  • Milton Friedman

Question 36

Question
The equation of exchange as interpreted by the person in the previous question says that increases in the money supply cause inflation and decrease in the money supply cause recessions.
Answer
  • True
  • False

Question 37

Question
The Neo-Classical [blank_start]Synthesis[blank_end] is the bringing together of Classical and Keynesian theory into modern economic theories.
Answer
  • Synthesis

Question 38

Question
New Keynesian economists blame recessions on:
Answer
  • "sticky" wages and prices
  • lack of spending
  • supply shocks
  • effective demand failures

Question 39

Question
New Classical economists blame recessions on:
Answer
  • "sticky" wages and prices
  • lack of spending
  • supply shocks
  • effective demand failures

Question 40

Question
Ben Bernanke, former chair of the Federal Reserve, blames the 2007 recession om too much savings coming into the United States, mostly from China.
Answer
  • True
  • False

Question 41

Question
Both New Keynesians and New Classicals believe the economy works according to Classical theory in the long run.
Answer
  • True
  • False

Question 42

Question
Aggregate Demand is:
Answer
  • total expenditure in the economy
  • total production in the economy
  • total consumer activity in the economy
  • both a and b

Question 43

Question
Keynesian economists believed that interest rates are determined by:
Answer
  • savings and investment
  • supply and demand for money
  • supply and demand for investment
  • money and savings

Question 44

Question
According to the Keynesians, the economy may be in disequiliribium.
Answer
  • True
  • False

Question 45

Question
The key to supply side economics is [blank_start]incentives[blank_end].
Answer
  • incentives

Question 46

Question
According to a Keynesian, _____ is the most volatile factor of the following:
Answer
  • consumption
  • taxes
  • savings
  • investment

Question 47

Question
Supply Side economics was correct in predicting that deregulation targeted at individual industries would improve the performance of the whole economy.
Answer
  • True
  • False

Question 48

Question
Most modern economists are:
Answer
  • New Monetarists
  • New Keynesians
  • New Classicals
  • New Orleans

Question 49

Question
The Laffer Curve says that there is a trade-off between inflation and unemployment.
Answer
  • True
  • False

Question 50

Question
New Classicals argue that new technologies destroy old jobs before they create many new jobs.
Answer
  • True
  • False
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