2.according to milton friedman, aany divergence in unemployment from its natural

Question

2.according to milton friedman, aany divergence in unemployment from its natural rate is temporary because...
a.anticipated price changes affect nominal wages in the short run but workers will rectify this over time
b.unanticipated price changes affect real wages in the short run but workers will rectify this over time
c.anticipated price changes affect real wages in the short run but workers will rectify this over time
d.unanticipated price changes creat inflation which is addressed by policymakers over time

3.a graph that depicts the relationship between the total quantity of goods and services demanded at the price level is the...
a.aggregate demand curve
b.average price level
c.circula flow model
d.GDP curve

4.a change in the aggregate quantity of goods and services supplied at every price level is called a
a.change in short run aggregate supply
b.change in long run aggregate supply
c.change in short run aggregate quantity of output supplied
d.determinant of short run aggregate supply

5.early classical macroeconomics was based largely on the foundation of...
a.flexible wages and prices
b.persistent unemployment
c.government intervention in the market
d. Adam Smiths model of imperfectly competitive markets

6. the Monetarists school of economics believes that changes in ____ are the primary causes of changes in___
a.money supply;real GDP
b.level of gov. spending; nominal GDP

c.money supply; nominal GDP
d.price level; real GDP

7.the short run in macroeconomic analysis is a period:

A- in which wages and some other prices do not respond to changes in economic conditions

B- in which full wage and price flexibility and market adjustment have been achieved.

C- of less than 12 months

D- in which all macroeconomic variables are fixed.

8. The long-run aggregate supply curve

A- relates the level of nominal output produced by firms to the implicit price deflator.

B- relates the level of output produced by firms to the price level in the long run.

C- is vertical because there is one price level and an infinite number of outputs.

D- is determined by the real output demanded by economic agents in an economy.

9. Keynes argued that the surest way to bring the economy out of the Great Depression was to

A- rely on expansionary monetary policy

B- use expansionary fiscal policy

C- impose wage controls to prevent drastic decreases in disposable income

D- leave the economy alone and flexible wages and price would eventually lead to increases in income and employment.

10. The use of government purchases, transfer payments, and taxes to influence the level of economic activity is called

A- monetary policy

B- fiscal policy

C- congressional policy

D- Federal Government policy

11. Using the aggregate demand-aggregate supply model, predict what happens in the short run when the federal government lowers the capital gains tax to stimulate investment

A- the aggregate demand curve shifts left; the aggregate supply curve is not affected; price level and GDP decrease

B- the aggregate demand curve shifts right; the aggregate supply curve is not affected; price level and real GDP decrease.

C- the aggregate supply curve shifts left; the aggregate demand curve is not affected; price level increases; real GDP decreases

D- the aggregate supply curve shifts right; the aggregate demand curve is not affected; price level decreases; real GDP increases.

12. According to Milton Friedman, any divergence in unemployment from its natural rate is temporary because

A- anticipated price changes affect nominal wages in the short run but workers will rectify this over time.

B- unanticipated price changes affect real wages in the short run but workers will rectify this over time.

C- anticipated price changes affect real wages in the short run but workers will rectify this over time.

D- unanticipated price changes create inflation which is addressed by policymakers over time.

Explanation / Answer

1)b

2)c

3)d

4)b

5)d

6)c

7)c

8)a

9)d

10)b

11)b

12)c

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