Econ201

Question 1

If a Phillips curve shows that unemployment is high and inflation is low in the economy, then that economy:

	a)  is producing at its potential GDP.
	b)  is producing at its equilibrium point.
	c)  is producing at a point where output is less than potential GDP.
	d)  is producing at a point where output is more than potential GDP.

 

Question 2

In a Keynesian cross diagram, what name is given to the distance between an output level that is below potential GDP and the level of potential GDP?

Question 16 options:

	a)  national income (Y)
	b)  expenditure-output
	c)  inflationary gap
	d) recessionary gap

 

Question 3

 

Which of the following will cause the multiplier to be smaller and cause changes in investor confidence to have a smaller effect in an economy?

	a)  decreased trade
	b)  bigger leakages
	c)  increased trade
	d)  smaller leakages

 

Question 4

Aggregate demand is more likely to _________________ than aggregate supply in the short run.

	a)  increase slightly
	b) . decrease substantially
	c)  shift substantially
	d)  remain unchanged

 

Question 5

Keynesian economics focuses on explaining why recessions and depressions occur, as well as offering a ______________________ for minimizing their effects.

:

	a)  policy prescription
	b)  set of menu costs
	c)  pricing strategy
	d)  macro-economic model

 

Question 6

 

Which of the following is a distinguishing characteristic of a Keynesian cross diagram?

 

	a)  45-degree line
	b)  real GDP on the horizontal axis
	c)  a flat line
	d)  several different Phillips curves

 

Question 7

 

Which of the following data would be analyzed to determine whether any shift in the MPI has occurred over the course of the past 5 year period?

	a)  interest rates
	b)  exchange rates
	c) MPS
	d)  foreign income

 

Question 8

 

According to the _____________________ argument, a market-oriented economy has no obvious way to implement a plan of systematic wage reductions.

	a)  sticky wage
	b)  sticky wage and price
	c)  coordination
	d)  Keynesian