MCQOPTIONS
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MCQOPTIONS
This section includes 13 Mcqs, each offering curated multiple-choice questions to sharpen your Economics knowledge and support exam preparation. Choose a topic below to get started.
| 1. |
Which of the following statements is true regarding the long-run aggregate supply curve? The long-run aggregate supply cruve ? |
| A. | Is vertical because an equal change in all prices and wages leaves output unaffected |
| B. | is positively sloped because price expectations and wages tend to be fixed is the long run |
| C. | shifts right when the government raises the minimum wage |
| D. | shifts left when the natural rate of unemployment falls |
| Answer» B. is positively sloped because price expectations and wages tend to be fixed is the long run | |
| 2. |
Which of the following would not cause a shift in the long-run aggregate supply curve ? |
| A. | All of these answers shift the long-run aggregate supply curve |
| B. | An increase in the available capital |
| C. | An increase in the available labour |
| D. | An increase in price expectations |
| Answer» E. | |
| 3. |
Which of the following statements about economic fluctuations is true ? |
| A. | None of these answers |
| B. | A depression is a mild recession |
| C. | A variety of spending income, and output measures can be used to measure economic fluctuation because most macroeconomic quantitties tend to fluctuate |
| D. | A recession is when output rises above the natural rate of output |
| Answer» D. A recession is when output rises above the natural rate of output | |
| 4. |
Which of the following is not a reason why the aggregate demand curve slopes downward ? |
| A. | The exchange-rate effect |
| B. | The wealth effect |
| C. | The classical dichotomy/monetary neutrality effect |
| D. | The interest-rate effect |
| Answer» D. The interest-rate effect | |
| 5. |
Which of the following events shifts the short run aggregate supply curve to the right ? |
| A. | a decrease in the money supply |
| B. | a drop-in oil prices |
| C. | an increase in government spending on military equipment |
| D. | None of these answers |
| E. | an increase in price expectations |
| Answer» C. an increase in government spending on military equipment | |
| 6. |
The natural rate of output is the amount of real GDP produced ? |
| A. | When the economy is at the natural rate of unemployment |
| B. | When the economy is at the natural rate of investment |
| C. | When the economy is at the natural rate of aggregate demand |
| D. | When there is no no unemployment |
| Answer» B. When the economy is at the natural rate of investment | |
| 7. |
Refers to Exhibit 4. Suppose the economy is operating in a recession such as point B in Exhibit 4. If policy makers allow the economy to adjust to the long run natural rate on its own, ? |
| A. | People will reduce their price expectations and the short run aggregate supply will shift right |
| B. | People will raise their price expectations and aggregate demand will shift left |
| C. | People will raise their price expectations and the short run aggregate supply will shift left |
| D. | People will reduce their price expectations and aggregate demand will shift right |
| Answer» B. People will raise their price expectations and aggregate demand will shift left | |
| 8. |
Refers to Exhibit 4. Suppose the economy is operating in a recession such as point B in Exhibit 4. If policy makers wished to move output to its long run natural rate they should attempt to ? |
| A. | Shift aggregate demand to the left |
| B. | Shift short run aggregate supply to the left |
| C. | shift aggregate demand to the right |
| D. | shift short-run aggregate supply to the right |
| Answer» D. shift short-run aggregate supply to the right | |
| 9. |
Policy makers are said to “accommodate” an adverse supply shock if they ? |
| A. | fail to respond to the adverse supply shock and allow the economy to adjust on its own. |
| B. | respond to the adverse supply shock by decreasing aggregate demand which lower prices |
| C. | respond to the adverse supply shock by decreasing short run aggregate supply |
| D. | respond to the adverse supply shock by increasing aggregate demand, which further raises prices |
| Answer» E. | |
| 10. |
In the model of aggregate demand and aggregate supply, the initial impact of an increase in consumer optimism is to ? |
| A. | shift the short-run aggregate supply curve to the left |
| B. | shift the aggregate demand curve to the right |
| C. | shift the short-run aggregate supply curve to the right |
| D. | shift the aggregate demand curve to the left |
| Answer» C. shift the short-run aggregate supply curve to the right | |
| 11. |
According to the wealth effect aggregate demand slopes downward (negatively) because ? |
| A. | lower prices increase the value of money holding and consumers spending increase |
| B. | lower prices decrease the value of money holding and consumers spending decrease |
| C. | lower prices reduce money holding increase lending, interest rates fall and investment spending increase |
| D. | lower prices increase money holding decrease lending, interest rates rise and investment spending falls |
| Answer» B. lower prices decrease the value of money holding and consumers spending decrease | |
| 12. |
According to the model of aggregate supply and aggregate demand in the long run an increase in the money supply should cause ? |
| A. | Prices to rise and output to rise |
| B. | Price to fall and output to remain unchanged |
| C. | Prices to fall and output to fall |
| D. | prices to rise and output to remain unchanged |
| Answer» E. | |
| 13. |
According to the interest rate effect aggregate demand slopes downward (negatively) because ? |
| A. | lower prices increase money holdings decrease lending interest rates rise, and investment spending falls |
| B. | lower prices increase the value of money holding and consumer spending increases |
| C. | lower prices decrease the value of money holdings and consumers spending decreases |
| D. | lower prices reduce money holdings increase lending interest rates fall, and investment spending increase |
| Answer» E. | |