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econ 2301 msidorya Exam | Questions with 100% Solutions/Verified Answers
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econ 2301 msidorya Exam | Questionswith 100% Solutions/Verified Answers
Which of the following is not an effect of an increase in the money supply? - ANSWER
Aggregate supply increases.
The net-export effect of contractionary monetary policy is - ANSWER a(n) appreciation of the
value of the dollar and the decrease of U.S. net exports.
Which of the following best describes the equation of exchange? - ANSWER MsV = PY
According to the simple quantity theory of money, which of the following variables
are considered either constant or relatively stable? - ANSWER V AND Y
The interest-rate-based transmission mechanism assumes that the Fed can stimulate
investment by - ANSWER BUYING BONDS
An open market sale of government securities by the Fed will cause which of the following? -
ANSWER an increase in the federal funds rate
The Federal Reserve's credit policy refers to - ANSWER the Fed's direct lending to financial and
nonfinancial firms.
,According to traditional Keynesians, when the central bank increases the money supply during a
recession - ANSWER people will keep most of it in their bank accounts.
The idea of policymaking being undertaken as a response to a change in the economy is
referred to as - ANSWER active policymaking
Structural unemployment may result from all of the following factors EXCEPT - ANSWER
improved elementary and secondary education.
Based on the work of economist A.W. Phillips, economists concluded that - ANSWER high
inflation rates are associated with low unemployment rates, and vice-versa.
Which statement is true when rational expectations exist and there is a change in monetary
policy which is unexpected? - ANSWER The change in monetary policy leads to a change in
aggregate demand that leads to a temporary short-run equilibrium that is different from the
long-run equilibrium.
According to economists who adhere to the policy irrelevance proposition, the impact of an
anticipated expansionary monetary policy will be to - ANSWER increase the price level in
the long run
Menu costs are a possible reason for - ANSWER sticky product prices
The longer is the interval between firms' price adjustments, - ANSWER the longer the interval
that the horizontal new Keynesian aggregate supply curve will remain in position.
A government budget deficit is - ANSWER an excess of government spending over government
revenues during a given time period.
When government spending exceeds government revenues during a given period of time -
ANSWER a budget deficit exists.
, According to the text, the net public debt to Gross Domestic Product (GDP) ratio is
currently about - ANSWER 60%
If the net public debt expanded last year, then which of the following most likely occurred
during the year? - ANSWER The government experienced a budget deficit.
Which of the following statements is true about the public debt and future generations? -
ANSWER Which of the following statements is true about the public debt and future
generations?
Historical evidence seems to indicate that - ANSWER budget and trade deficits generally move
in the same direction.
Suppose the economy is initially operating at full employment. A fiscal policy action that
results in an increase in the size of the budget deficit will cause which of the following in the
long run? - ANSWER change the composition of real GDP
Politicians have suggested that the budget deficit could be reduced by - ANSWER
increasing taxes and reducing expenditures
The fastest growing component of the annual federal budgets since 2000 is - ANSWER
entitlement payments.
For something to serve as money, it must be - ANSWER generally accepted by buyers and
sellers.
Which one of the following statements is true? - ANSWER Not all forms of currency are
accepted equally well by the public as a medium of exchange.
Which of the following items is the most liquid? - ANSWER a checking account
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