1)for this question, assume that the economy is initialy operating at the natura

Question

1)for this question, assume that the economy is initialy operating at the natural level of output. a reduction in taxes will cause:

A) ambigous effects on the real wage in medium run

B)an increase in the real wage in the medium run

C)a reduction in real wage in the medium rum

D) No change in the norminal wage in the medium run

E) none of the above.

2)For this question, assume that the economy is initialy operating at the natural level of output. an increase in consumer confidence will cause

A)an increase in the real wage in the medium run

B)no change in the real wage in the medium run

C)a reduction in real wage in the mediuum run

E) ambiguous effects on the real wage in the medium run.

3)assume that the economy is initialy operating at the natural level of output. an increase in the price of oil will cause which of the following in the dedium run

A) a reduction in output and a reduction in interest rate

B) a reduction in the interest rate

C) a reduction in output and an increase in the agregate price level

D) a reduction in the aggregate price level and no change in output

E)a reduction in umemployment, an increase in the norminal wage and an increase in the aggregate price level.

4)which of the following represent a short-run effect of a monetary contraction?

A)a reduction in output

B)an increase in the interest rate

C)a reduction in the price level

D) all of the above

E) none of the above

Explanation / Answer

1. B)an increase in the real wage in the medium run

2. A)an increase in the real wage in the medium run

3. C) a reduction in output and an increase in the agregate price level

4. D) all of the above

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