18 Questions
What is the condition for labour market equilibrium?
Nd = Ns
What is the effect of a bond-financed increase in government spending on the equilibrium values of output and the price level?
It has no effect on output and the price level
What is the relationship between the interest rate and the supply of loanable funds at equilibrium?
The interest rate equals the supply of loanable funds
What is the effect of a bond-financed increase in government spending on the interest rate?
It increases the interest rate
What is the Fisher's equation of exchange?
MV = PY
What is the condition for capital market equilibrium?
S = I
What happens to the equilibrium interest rate when government deficit spending is added?
It rises
What is the effect on aggregate demand when government spending is financed by selling bonds to the public?
It remains the same
What happens to the supply curve when the money supply increases?
It remains vertical
What is the effect on the price level when government spending is financed by increasing the money supply?
It increases
What is the effect of tax policy on the economy?
It has the same effect as government spending
What happens to private expenditure when government spending is financed by selling bonds to the public?
It decreases
What is the primary effect of reducing marginal income tax rates?
Increase in labor supply
What happens to the labor supply schedule when the marginal income tax rate falls?
It shifts to the right
What is the result of an increase in labor supply?
An increase in employment
What determines the price level and nominal income in the classical system?
Quantity of money
What is the effect of monetary policy on real variables in the classical system?
It has no effect
What is the result of a shift to the right in the aggregate supply curve?
An increase in output
This quiz recaps the key concepts of intermediate macroeconomics, including production and labor functions, labor market equilibrium, and the classical equilibrium model. It also covers the effects of fiscal and monetary policies. Test your understanding of these important economics concepts.
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