Questions from General Economics

Q: 1.1. Economic models that assume that wages and prices

1.1. Economic models that assume that wages and prices adjust freely to changes in demand and supply are known as __________ models. 1.2. At full employment, there are only frictional and __________ u...

Q: 3.1. As the price level increases, the demand

3.1. As the price level increases, the demand for money _________ and interest rates _________. 3.2. If output is above full employment, we expect wages and prices to rise, money demand to increase,...

Q: 3.1. An aggressive union will shift the aggregate supply

3.1. An aggressive union will shift the aggregate supply curve _________, causing prices to and real GDP to _________. 3.2. In the face of an upward shift in the aggregate supply curve, the Fed can i...

Q: 5.1. To eliminate a budget deficit, a government

5.1. To eliminate a budget deficit, a government can _________ (increase/decrease) taxes and/or _________ (increase/decrease) spending. 5.2. During hyperinflations the velocity of money tends to ____...

Q: 4.1. The velocity of money is defined as _________

4.1. The velocity of money is defined as _________ income divided by the supply of money. 4.2. According to the quantity equation, the product of money supply and velocity is equal to the product of...

Q: 1.1. The expected real rate of interest is the

1.1. The expected real rate of interest is the nominal interest rate plus the expected inflation rate. _________ (True/ False) 1.2. Countries with lower rates of money growth have _________ interest...

Q: 2.1. If actual inflation is higher than expected inflation

2.1. If actual inflation is higher than expected inflation, the actual unemployment rate will be _________ than the natural rate. 2.2. James Tobin explained business cycles with rational expectations...

Q: 2.1. In recent years, many developed countries have

2.1. In recent years, many developed countries have found that inflation targeting (increased/ decreased) the autonomy of their central banks, helping them fight inflation. 2.2. In...

Q: 1.1. If a government runs a deficit, it

1.1. If a government runs a deficit, it will its outstanding debt. 1.2. Proponents of Ricardian equivalence believe that deficits do not really matter as long as taxes are rai...

Q: 3.1. Suppose there is a consumption tax of 20

3.1. Suppose there is a consumption tax of 20 percent. You earn $1,150, have an income tax rate of 30 percent, and save $100 after tax. Your tax will be equal to . 3.2. A sales tax that is levied at...