Macroeconomics Quiz # 9

The sum of private saving and public saving in an economy is known as its ______ saving.

International

National

Closed

Open

Vera is studying the national budget of her country. She has found that, for her nation, T > G + TR. Vera’s country has ______.

Net exports

High interest rates

A budget surplus

Low household investment

The supply of loanable funds curve is ______.

Flat

Vertical

Negatively sloped

Positively sloped

The theory that government borrowing drives up the interest rate, lowering consumption by households and investment spending by firms is known as ______.

The Gini coefficient

The crowding-out effect

A budget deficit

A budget surplus

Fed policy after the 2001 recession ______.

Created high interest rates

Created low interest rates

Left interest rates unchanged

Had little effect on interest rates

Many of the people who took out subprime loans early in the 21st century ______.

Had well-established credit

Had nearly perfect credit scores

Had already been accepted for traditional loans

Were ineligible for traditional loans

In 2005–2006, the Fed ______.

Raised interest rates

Lowered interest rates

Set negative interest rates

Froze interest rates

Quickly buying and selling houses is known as ______.

Dumping

Flipping

Securing

Backing

One of the main reasons that Lehman Brothers failed is that it ______.

Issued a large number of loans to people with poor credit

Missed out on the housing boom of the early twenty-first century

Underestimated the risk of mortgage-backed securities

Was penalized for violating the terms of the Dodd-Frank Act

Models that include international trade effects are called ______ models.

Open economy

Disposable income

Closed economy

Government purchase

Household spending contributes to which components of aggregate demand?

Investment and loanable funds

GDP and disposable income

Consumption and imports

Disposable income and government purchases

The total amount of real goods and services produced in the United States that foreigners and American households, firms, and government entities want to purchase is shown in a(n) ______ curve.

Long-run aggregate supply

Aggregate demand

Short-run aggregate supply

Individual demand

When the price level in the United States falls relative to the price level in other countries, ceteris paribus, what does the foreign demand effect say will happen?

U.S. exports will decrease and U.S. imports will increase.

U.S. exports and U.S. imports will both decrease.

U.S. exports will increase and U.S. imports will decrease.

U.S. exports and U.S. imports will both increase.

Anything that changes the amount of total spending in the economy (holding ______ constant) will shift the ______ curve.

Consumption; long-run aggregate supply

Price levels; aggregate demand

Net exports; short-run aggregate supply

Investment; aggregate supply

An increase in population will ______.

Decrease consumption

Decrease aggregate supply

Increase aggregate supply

Increase aggregate demand

The total quantity of final goods and services suppliers are willing and able to supply at a given price level is shown on a(n) ______ curve.

Investment

Disposable income

Aggregate supply

Aggregate demand

How does an increase in the price level affect the short-run aggregate supply curve?

There is a leftward shift in the curve.

There is a rightward movement along the curve.

There is a rightward shift in the curve.

There is a leftward movement along the curve.

Both the long-run aggregate supply curve and the short-run aggregate supply curve can shift rightward due to ______.

Increases in factors of production

Increases in money wages

Decreases in factors of production

Positive supply shocks

The long-run aggregate supply curve can be shifted to the left by ______.

Overregulation

Lower tax rates

Favorable weather

Technological advances

What are the effects on the short-run aggregate supply (SRAS) curve and the long-run aggregate supply (LRAS) curve when costs of production fall and potential real output expands?

The SRAS curve shifts leftward, and the LRAS curve shifts rightward.

Both curves shift leftward.

The SRAS curve shifts rightward, and the LRAS curve shifts leftward.

Both curves shift rightward.

Only a short-run equilibrium that is ______ is also a long-run equilibrium.

Greater than potential output

At a very low price level

In a recessionary gap

At potential output

The long-run aggregate supply curve for the United States ______ over time.

Shifts rightward

Becomes horizontal

Shifts leftward

Remains in the same position

When graphically representing aggregate supply (AS), the classical model relies solely on the ______ AS curve.

Upward sloping short-run

Horizontal long-run

Downward sloping short-run

Vertical long-run

In the Keynesian model the short-run aggregate supply curve is horizontal over the range of output where ______.

Actual real GDP is above potential GDP and the economy is beyond capacity

A change in aggregate demand has a large impact on the price level

Actual real GDP is below potential GDP and firms are operating with excess capacity

A change in aggregate demand has very little change on output

Which economist created the aggregate expenditure model?

Jeremy Bentham

Alfred Marshall

John Maynard Keynes

Adam Smith

What type of expenditures are the largest single component of demand for final goods?

Business

Household

Government

Investment

Which of the following is an autonomous factor that, when decreased, causes consumer spending to rise?

Real wealth

The interest rate

Consumer confidence

Income

The additional saving that results from an additional dollar of income is known as marginal propensity to ______.

Consume

Invest

Save

Hoard

Which of the following is TRUE of the sum of marginal propensity to consume and marginal propensity to spend?

It always equals 1.

It always equals 0.

It varies depending on consumer tastes and preferences.

It varies over the course of a consumer’s life.

Which of the following refers to the point at which aggregate expenditure equals output?

The margin

Autonomy

Recession

Equilibrium