Preview Assessment: Quiz Chapter 21

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PRINCIPLES OF MACROECONOMICS (201220-ECON215-2) > CONTROL PANEL > PREVIEW ASSESSMENT: QUIZ CHAPTER 21

Preview Assessment: Quiz Chapter 21

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Quiz Chapter 21

Multiple Attempts Not allowed. This Test can only be taken once. Force Completion This Test can be saved and resumed later.

Question Completion Status: Question 1 Fiscal policy affects the economy

only in the short run. only in the long run. in both the short and long run. in neither the short nor the long run.

10 points

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Question 2 People hold money primarily because it

has a guaranteed nominal return. serves as a store of value. can directly be used to buy goods and services. functions as a unit of account.

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Question 3 If the Fed increases the money supply,

the interest rate increases, which tends to raise stock prices. the interest rate increases, which tends to reduce stock prices. the interest rate decreases, which tends to raise stock prices. the interest rate decreases, which tends to reduce stock prices.

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Question 4

10 points In which of the following cases does the aggregate-demand curve shift to the right?
The price level rises, causing the interest rate to fall. The price level falls, causing the interest rate to fall. The money supply increases, causing the interest rate to fall. The money supply decreases, causing the interest rate to fall.

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Preview Assessment: Quiz Chapter 21

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Question 5

10 points Charisse is of the opinion that the interest rate depends on the economys saving propensities and investment opportunities. Most economists would say that Charisses opinion is
Keynesian in nature, and that her view is more valid for the long run than for the short run. classical in nature, and that her view is more valid for the long run than for the short run. Keynesian in nature, and that her view is more valid for the short run than for the long run. classical in nature, and that her view is more valid for the short run than for the long run.

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Question 6 If the inflation rate is zero, then

both the nominal interest rate and the real interest rate can fall below zero.

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the nominal interest rate can fall below zero, but the real interest rate cannot fall below zero. the real interest rate can fall below zero, but the nominal interest rate cannot fall below zero. neither the nominal interest rate nor the real interest rate can fall below zero.

Question 7

10 points Which of the following tends to make aggregate demand shift further to the right than the amount by which government expenditures increase?
the crowding-out effect the multiplier effect the exchange-rate effect the interest-rate effect

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Question 8 A tax increase has

a multiplier effect but not a crowding out effect a crowding out effect but not a multiplier effect both a crowding out and multiplier effect neither a multiplier or crowding out effect

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Question 9 Keynes argued that aggregate demand is

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stable, because the economy tends to return to its long-run equilibrium quickly after any disturbance to aggregate demand. stable, because changes in consumption are mostly offset by changes in investment and vice versa. unstable, because waves of pessimism and optimism create fluctuations in aggregate demand. unstable, because of long and variable policy lags that worsen economic fluctuations.

Question 10

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Preview Assessment: Quiz Chapter 21

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In the long run, changes in the money supply affect

prices. output. unemployment rates. All of the above.

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