Macro
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| If factor markets were perfectly competitive, then full employment would be the normal condition and | show 🗑
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| show | $22
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| show | additional resources (especially labor) can be hired to produce additional output with little or no increase in existing prices
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| show | investment as a share of GDP was below 3 percent
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| show | potential GDP
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| Most economists prior to Keynes thought that | show 🗑
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| show | thought that nominal wages were rigid even when there was unemployment
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| The Keynesian aggregate supply curve implies that | show 🗑
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| In the Keynesian aggregate supply curve case, | show 🗑
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| In which of the following cases will the AS-curve be horizontal? | show 🗑
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| Given the Keynesian AS-curve, expansionary monetary policy will | show 🗑
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| In the Keynesian supply curve case, a fiscal expansion will | show 🗑
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| show | the AS-curve is more price elastic in the long run than in the short run
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| The AD-AS diagram used in this chapter | show 🗑
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| Which of the following is NOT reflected in a shift of the AD-curve? | show 🗑
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| The slope of the AS-curve becomes steeper | show 🗑
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| A decrease in real money supply caused by an increase in the price level is graphically represented by | show 🗑
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| The natural rate of unemployment is | show 🗑
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| show | unemployment resulting from people shifting between jobs and looking for new jobs
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| show | there is still some positive level of unemployment due to frictions in the labor market
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| show | a decrease in government transfer payments
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| show | the interest rate will increase while aggregate demand and prices may increase, decrease, or remain the same
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| show | a decrease in the price level increases real money balances, leading to lower interest rates and increased spending
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| show | a decrease in taxes
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| An increase in aggregate demand can be caused by | show 🗑
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| To maintain a fixed level of aggregate demand, the Fed would have to respond to a tax increase by | show 🗑
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| In a normal AD-AS diagram with an upward-sloping AS-curve, if the government wanted to maintain a fixed level of output, it would need to respond to a decrease in money supply by | show 🗑
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| show | interest rates will decrease, while output and prices may increase, decrease, or remain the same
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| show | aggregate demand, the price level, and output will all increase
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| If government purchases and taxes are both increased by the same lump sum, we can expect the following in the medium run: | show 🗑
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| show | increase output and the price level but lower the interest rate
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| When nominal money supply is held constant and the price level increases, then | show 🗑
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| show | a shift of the AD-curve to the left
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| show | if the economy is in a recession
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| show | -in the Keynesian case
-in the classical case
-in the medium run
D)all of the above
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| In the classical supply curve case, monetary expansion will | show 🗑
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| show | none of the above policies would succeed in significantly increasing the level of output
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| show | if wages adjust rapidly to maintain equilibrium in the labor market
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| An increase in government purchases will not increase the level of output if | show 🗑
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| show | the AS-curve is vertical
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| 41. In the AD-AS model, fiscal or monetary policy cannot affect the level of output in | show 🗑
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| The income velocity of money can be calculated using the following formula | show 🗑
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| If nominal GDP is $12,600 billion and nominal money supply is $6,300 billion, then the income velocity of money is | show 🗑
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| show | -real money balances must be unchanged
-money is said to be neutral
E)both A) and D)
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| show | -a fairly large increase in aggregate demand
-a fairly small increase in aggregate supply
-an increase in the price level
D)all of the above
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| Supply-side economics involves policy measures designed to | show 🗑
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| show | a large shift in the AD-curve but a small shift in the AS-curve
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| When we say that potential GDP is exogenous with respect to the price level, we refer to | show 🗑
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| In the long run, as potential GDP grows at a steady pace and nominal money supply is continuously increased over time | show 🗑
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| As nominal money supply is steadily increased and the long-run AS-curve shifts to the right over time, we realize that | show 🗑
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