Multiple Choice Questions Nfd
1. An increase in the cost of producing output, ceteris paribus, (a) increases the price level and real output, (ib) increases the price level and decreases real output, (c) increases the price level and has no effect upon real output, id) has no effect upon the price level or real output.
2. When there is a Keynesian aggregate supply curve, an increase in aggregate demand results in proportional increases in
(a) real output, as long as output is below its full-employment levels
(b) the price level, as long as output is below its full-employment level,
(c) the cost of producing real output, as long as output is below its full-employment level,
(d) real output once output is at its full-employment level.
3. An increase in aggregate demand results in an increase in output
(a) and in the price level when there is a Keynesian aggregate supply curve,
(b) and no change in the price level when aggregate supply is vertical,
(c) and in the price level when aggregate supply is positively sloped,
(d) and no change in the price level when aggregate supply is positively sloped.
4. The Phillips curve shows that
(a) high unemployment rates are associated with low inflation rates,
(b) high unemployment rates are associated with high inflation rates,
(c) high unemployment rates are associated with a large increase in the nominal wage, 0d) high inflation rates are associated with a small increase in the nominal wage.
5. In the short run, increases in the nominal wage are associated with
(a) movement up a Phillips curve,
(b) an outward shift of the Phillips curve,
(c) a decrease in the rate of unemployment,
(id) increased likelihood of demand-pull inflation.
6. The existence of a natural rate of unemployment suggests that
(a) there is no inflation-unemployment trade-off in the long run,
(b) nominal wage increases lag price increases in the long run,
(c) nominal wage increases lead price increases in the long run,
(d) the short-run Phillips curve is steeper than the long-run Phillips curve.
7. A federal deficit exists when
(a) government expenditures are greater than gross tax revenues plus government transfers,
(b) government expenditures plus government transfers are greater than gross tax revenues,
(c) gross tax revenues less government transfers are greater than government expenditures, {d) gross tax revenues plus government transfers are greater than government expenditures.
8. What happens to the structural deficit and the cyclical deficit when the unemployment rate is above the natural unemployment rate?
(a) The structural deficit increases; there is no change in the cyclical deficit.
(b) The structural deficit and the cyclical deficit increase.
(c) The cyclical deficit increases; there is no change in the structural deficit.
(d) The cyclical deficit increases, while the structural deficit decreases.
9. The public debt imposes a burden on future generations when
(a) the government balances the budget over the business cycle,
(b) it is completely owed to citizens of the issuing country,
(c) it is largely owed to foreigners,
(d) taxes do not have to be increased in the future to cover higher interest payments on the debt.
10. The federal deficit increased during the 1980s because
(a) federal outlays increased at a faster rate than federal transfers,
(b) federal outlays increased at a faster rate than net tax receipts,
(c) federal outlays increased at a faster rate than federal revenues,
{d) government expenditures increased at a faster rate than federal transfers.
Post a comment