1. If the amount of money in circulation is $180 billion and the value of the ec
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Question
1. If the amount of money in circulation is $180 billion and the value of the economy's total output is $540 billion, then the:
A. circulation period of money must be one-fourth of a year.
B. velocity of money is 4.
C. average price per final good sold is $3.
D. velocity of money is 3.
2. According to real-business-cycle theory:
A. monetary factors affecting aggregate demand cause macroeconomic instability.
B. recessions result from declines in long-run aggregate supply, rather than decreases in aggregate demand.
C. when real wages fall during recessions, "real" unemployment rates rise.
D. the net long-run costs of business fluctuations are severe.
4. In new classical economics, "a price-level surprise":
A. has no effect on the economy.
B. causes a temporary change in real output.
C. causes a permanent change in real output.
D. can never occur since people correctly anticipate the future.
5. (Consider This) Monetarists claim that the financial crisis and resulting 2007-2009 recession were caused largely by:
A. monetary policy that was too loose for too long.
B. monetary policy that was too tight for too long.
C. unexpected changes in the velocity of money.
D. declines in business and consumer confidence.
6. Differences in production efficiencies among nations in producing a particular good result from:
A. different endowments of fertile soil.
B. different amounts of skilled labor.
C. different levels of technological knowledge.
D. all of these.
7. In a two-nation model, the equilibrium world price will occur where:
A. one nation's export supply curve intersects the other nation's import demand curve.
B. exports are exactly twice the level of imports.
C. both nations' export supply curves are horizontal.
D. both nations' import demand curves are vertical.
9. In comparing a tariff and an import quota, we find that:
A. the tariff and quota both generate the same amount of revenue for the U.S. Treasury.
B. the tariff generates revenue for the U.S. Treasury, but the quota does not.
C. the quota generates revenue for the U.S. Treasury, but the tariff does not.
D. neither the tariff nor the quota generates revenue for the U.S. Treasury.
10. Research studies indicate that:
A. U.S. producers gain more from tariffs than U.S. consumers lose.
B. the costs of trade restrictions are proportionately higher for high-income groups than for low-income groups.
C. the revenue from tariffs equals the total cost that tariffs impose on consumers.
D. U.S. consumers lose more from tariffs than U.S. producers gain.
3)Refer to the diagram. The real-business cycle view of recession would best be described by:
A. a decrease of aggregate demand from AD1 to AD2, followed by a decrease in aggregate supply from ASLR1 to ASLR2.
B. an increase in aggregate demand from AD1 to AD2, which in turn caused a decrease in aggregate supply from ASLR1 to ASLR2.
C. a decrease in aggregate supply from ASLR1 to ASLR2, followed by a decrease in aggregate demand from AD1 to AD2.
D. a decrease in aggregate supply from ASLR1 to ASLR2, followed by an increase in aggregate demand from AD2 to AD1.
8. Answer the question on the basis of the following data for the hypothetical nations of Alpha and Beta. Qs is domestic quantity supplied and Qd is domestic quantity demanded.
Refer to the given data. The domestic equilibrium prices of steel in Alpha and Beta are:
A. $5 and $4, respectively.
B. $2 and $4, respectively.
C. $3 and $2, respectively.
D. $1 and $2, respectively.
Explanation / Answer
1. Velocity of money can be calculated as follows
Velocity of money = Total Output / Money in circulation = 540 / 180 = 3
So option D is correct.
2. According to real-business-cycle theory recession is the result of decrease in aggregate supply and not related to aggregate demand.
So option B is correct.
According to real-business-cycle theory recessions result from declines in long-run aggregate supply, rather than decreases in aggregate demand
4. Neo classical theory states that real growth in GDP / Output is always constant. An increase in price level would cause temporary increase in output, however this falls down to normal levels in the near future.
So option B is correct.
In new classical economics, "a price-level surprise": causes a temporary change in real output.
5. Monetarists always deal with the monetary policy. So they believe that, 2007-09 recession was caused by the ineffective monetary policy or fail to modify the monetary policy on time.
So option A is correct.
Monetarists claim that the financial crisis and resulting 2007-2009 recession were caused largely by monetary policy that was too loose for too long
6. Production efficiencies in any nation is a result of Fertile Soil, Skilled Labor and also levels of technical knowledge.
So option D is correct.
Differences in production efficiencies among nations in producing a particular good result from different endowments of fertile soil; different amounts of skilled labor; different levels of technological knowledge.
So All of the Above.
Please ask the remaining questions in another post
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