Question 1

In the classical model,less consumption and more savings would

Accepted Answer

A) increase aggregate supply and output. 
B) reduces aggregate demand and output.. 
C) decrease real interest rates and output. 
D) cause the price level to rise with no effect on output. 
E) have no effect on output or the price level. 
A) increase aggregate supply and output. 
B) reduces aggregate demand and output.. 
C) decrease real interest rates and output. 
D) cause the price level to rise with no effect on output. 
E) have no effect on output or the price level.

Question 2

In the classical model,an increase in government spending shifts the

Accepted Answer

A) demand for loanable funds to the right. 
B) demand for loanable funds to the left. 
C) supply of loanable funds to the right. 
D) supply of loanable funds to the left. 
A) demand for loanable funds to the right. 
B) demand for loanable funds to the left. 
C) supply of loanable funds to the right. 
D) supply of loanable funds to the left.

Question 3

In the classical model,the level of business investment was a function of

Accepted Answer

A) only the expected profitability of investment projects. 
B) only the real interest rate. 
C) both the expected profitability of investment projects and the real interest rate. 
D) None of the above 
E) only the nominal interest rate. 
A) only the expected profitability of investment projects. 
B) only the real interest rate. 
C) both the expected profitability of investment projects and the real interest rate. 
D) None of the above 
E) only the nominal interest rate.

Question 4

Hyperinflations are caused by

Accepted Answer

A) persistant falls in aggregate supply. 
B) increases in poverty levels. 
C) high levels of money growth over sustained periods of time. 
D) falls in the velocity of money. 
A) persistant falls in aggregate supply. 
B) increases in poverty levels. 
C) high levels of money growth over sustained periods of time. 
D) falls in the velocity of money.

Question 5

During the recession of 2008,the U.S.experienced lower real interest rates at the same time investment and GDP were falling.How would a Classical economist explain this recession? Provide a graph of the Classical capital market to illustrate your arguments.

Accepted Answer

This must have been caused by

Question 6

According to the classical system,saving is a function of

Accepted Answer

A) income. 
B) the real interest rate. 
C) the real wage. 
D) the profitability of firms. 
E) all of the above. 
A) income. 
B) the real interest rate. 
C) the real wage. 
D) the profitability of firms. 
E) all of the above.

Question 7

Supply-side economists

Accepted Answer

A) focus almost exclusively on the supply-side effects of changes in the money supply. 
B) did not devote much attention to the supply-side effects of changes in income tax rates since the marginal income tax rate is very low and pertained only to the relatively wealthy. 
C) argued that cuts in marginal tax rates had very favorable supply-side effects. 
D) argue that government spending is at least as important as tax rates. 
A) focus almost exclusively on the supply-side effects of changes in the money supply. 
B) did not devote much attention to the supply-side effects of changes in income tax rates since the marginal income tax rate is very low and pertained only to the relatively wealthy. 
C) argued that cuts in marginal tax rates had very favorable supply-side effects. 
D) argue that government spending is at least as important as tax rates.

Question 8

Consider the impact of an increase in labor-enhancing technology within the classical model.Provide graphs to illustrate what happens to real wages,labor,output,and the price level.

Accepted Answer

An increase in labor-enhancing technolog

Question 9

What is the difference between savings and investment?

Accepted Answer

Investment refers to the purch

Question 10

If there is an increase in government spending that is financed by issuing bonds,then

Accepted Answer

A) interest rates should rise which increases private investment. 
B) interest rates will remain the same unless taxes are reduced as well. 
C) interest rates should fall which increases private investment. 
D) interest rates should rise which decreases private investment. 
E) None of the above. 
A) interest rates should rise which increases private investment. 
B) interest rates will remain the same unless taxes are reduced as well. 
C) interest rates should fall which increases private investment. 
D) interest rates should rise which decreases private investment. 
E) None of the above.

Question 11

Classical economists

Accepted Answer

A) argued that the money supply determined aggregate demand. 
B) regarded monetary policy as unimportant since the quantity of money does not determine the price level. 
C) believed that the quantity of money influences interest rates and real wages. 
D) believed that prices would increase more than proportionate to an increase in the money supply. 
A) argued that the money supply determined aggregate demand. 
B) regarded monetary policy as unimportant since the quantity of money does not determine the price level. 
C) believed that the quantity of money influences interest rates and real wages. 
D) believed that prices would increase more than proportionate to an increase in the money supply.

Question 12

Why do people hold money in the classical model?

Accepted Answer

People hold money because it i

Question 13

In the classical model the interest rate is determined by

Accepted Answer

A) real investment demand. 
B) real saving. 
C) government spending. 
D) tax revenues. 
E) all of the above. 
A) real investment demand. 
B) real saving. 
C) government spending. 
D) tax revenues. 
E) all of the above.

Question 14

According to the quantity theory,inflation is ultimately controlled by

Accepted Answer

A) private firms who set prices. 
B) the monetary authorities who control the money supply. 
C) those who control output. 
D) the price of oil. 
A) private firms who set prices. 
B) the monetary authorities who control the money supply. 
C) those who control output. 
D) the price of oil.

Question 15

Which of the following statements is (are)correct? The equilibrium interest rate is the rate that

Accepted Answer

A) equates the supply of loanable funds with the demand for loanable funds 
B) equates new saving with investment plus the bond-financed government surplus 
C) equates private savings with investment 
D) All of the above 
E) None of the above 
A) equates the supply of loanable funds with the demand for loanable funds 
B) equates new saving with investment plus the bond-financed government surplus 
C) equates private savings with investment 
D) All of the above 
E) None of the above

Question 16

In the classical model,a rise in the marginal income tax rate would

Accepted Answer

A) cause the price level to rise and the level of real output to fall. 
B) cause the price level and the level of real output to both fall. 
C) cause the price level to rise with no effect on real output. 
D) leave both real output and the price level unchanged. 
A) cause the price level to rise and the level of real output to fall. 
B) cause the price level and the level of real output to both fall. 
C) cause the price level to rise with no effect on real output. 
D) leave both real output and the price level unchanged.

Question 17

The quantity theory assumes that

Accepted Answer

A) velocity is constant. 
B) income is constant. 
C) prices are constant. 
D) transactions are constant. 
A) velocity is constant. 
B) income is constant. 
C) prices are constant. 
D) transactions are constant.

Question 18

Assuming that,over a given period,the value of transactions in current dollars is $8 trillion and the money stock is $500 billion.What is the transaction velocity of money?

Accepted Answer

A)  .0625 
B)  12 
C) 16 
D) None of the above 
A)  .0625 
B)  12 
C) 16 
D) None of the above

Question 19

The equation of exchange is a(n)

Accepted Answer

A) identity relating the volume of transactions at current prices to the stock of money times the turnover rate of each dollar. 
B) "truism" and by itself does not explain the variables it contains. 
C) identity relating the volume of transactions at base year prices to the stock of money times the turnover rate of each dollar. 
D) Both a and b 
E) Both b and c 
A) identity relating the volume of transactions at current prices to the stock of money times the turnover rate of each dollar. 
B) "truism" and by itself does not explain the variables it contains. 
C) identity relating the volume of transactions at base year prices to the stock of money times the turnover rate of each dollar. 
D) Both a and b 
E) Both b and c

Question 20

According to the classical model,a 10-percent increase in the money supply,holding everything else constant,will lead to

Accepted Answer

A) a 10% increase in prices,a 10% increase in the real wage,and a 10% increase in interest rates. 
B) a 10% increase in prices,a 10% increase in the money wage,and a 10% increase in interest rates. 
C) a 10% increase in prices,a 10% increase in the money wage,and no change in interest rates. 
D) a 10% increase in prices and no change in the money wage or interest rates. 
E) none of the above. 
A) a 10% increase in prices,a 10% increase in the real wage,and a 10% increase in interest rates. 
B) a 10% increase in prices,a 10% increase in the money wage,and a 10% increase in interest rates. 
C) a 10% increase in prices,a 10% increase in the money wage,and no change in interest rates. 
D) a 10% increase in prices and no change in the money wage or interest rates. 
E) none of the above.

In the classical model,less consumption and more savings would

In the classical model,an increase in government spending shifts the

In the classical model,the level of business investment was a function of

Hyperinflations are caused by

During the recession of 2008,the U.S.experienced lower real interest rates at the same time investment and GDP were falling.How would a Classical economist explain this recession? Provide a graph of the Classical capital market to illustrate your arguments.

According to the classical system,saving is a function of

Supply-side economists

Consider the impact of an increase in labor-enhancing technology within the classical model.Provide graphs to illustrate what happens to real wages,labor,output,and the price level.

What is the difference between savings and investment?

If there is an increase in government spending that is financed by issuing bonds,then

Classical economists

Why do people hold money in the classical model?

In the classical model the interest rate is determined by

According to the quantity theory,inflation is ultimately controlled by

Which of the following statements is (are)correct? The equilibrium interest rate is the rate that

In the classical model,a rise in the marginal income tax rate would

The quantity theory assumes that

Assuming that,over a given period,the value of transactions in current dollars is $8 trillion and the money stock is $500 billion.What is the transaction velocity of money?

The equation of exchange is a(n)

According to the classical model,a 10-percent increase in the money supply,holding everything else constant,will lead to

Introduction

Measurement of Macroeconomic Variables

Classical Macroeconomics I: Output and Employment

Keynesian System I: the Role of Aggregate Demand

Keynesian System II: Money,interest,and Income

Keynesian System III: Policy Effects in the Is-Lm Model

Keynesian System Iv: Aggregate Supply and Demand

The Monetarist Counterrevolution

Output,inflation,and Unemployment: Alternative Views

New Classical Economics

Real Business Cycles and New Keynesian Economics

Macroeconomic Models:a Summary

Exchange Rates and the International Monetary System

Monetary and Fiscal Policy in the Open Economy

Money,the Banking System,and Interest Rates

Optimal Monetary Policy

Fiscal Policy

Policies for Intermediate-Run Growth

Long-Run Economic Growth: Origins of the Wealth of Nations

Filters

Exam 4: Classical Macroeconomics II: Money,prices,and Interest

In the classical model,less consumption and more savings would

In the classical model,an increase in government spending shifts the

In the classical model,the level of business investment was a function of

Hyperinflations are caused by

During the recession of 2008,the U.S.experienced lower real interest rates at the same time investment and GDP were falling.How would a Classical economist explain this recession? Provide a graph of the Classical capital market to illustrate your arguments.

According to the classical system,saving is a function of

Supply-side economists

Consider the impact of an increase in labor-enhancing technology within the classical model.Provide graphs to illustrate what happens to real wages,labor,output,and the price level.

What is the difference between savings and investment?

If there is an increase in government spending that is financed by issuing bonds,then

Classical economists

Why do people hold money in the classical model?

In the classical model the interest rate is determined by

According to the quantity theory,inflation is ultimately controlled by

Which of the following statements is (are)correct? The equilibrium interest rate is the rate that

In the classical model,a rise in the marginal income tax rate would

The quantity theory assumes that

Assuming that,over a given period,the value of transactions in current dollars is $8 trillion and the money stock is $500 billion.What is the transaction velocity of money?

The equation of exchange is a(n)

According to the classical model,a 10-percent increase in the money supply,holding everything else constant,will lead to

Introduction

Measurement of Macroeconomic Variables

Classical Macroeconomics I: Output and Employment

Keynesian System I: the Role of Aggregate Demand

Keynesian System II: Money,interest,and Income

Keynesian System III: Policy Effects in the Is-Lm Model

Keynesian System Iv: Aggregate Supply and Demand

The Monetarist Counterrevolution

Output,inflation,and Unemployment: Alternative Views

New Classical Economics

Real Business Cycles and New Keynesian Economics

Macroeconomic Models:a Summary

Exchange Rates and the International Monetary System

Monetary and Fiscal Policy in the Open Economy

Money,the Banking System,and Interest Rates

Optimal Monetary Policy

Fiscal Policy

Policies for Intermediate-Run Growth

Long-Run Economic Growth: Origins of the Wealth of Nations

Filters