Macro Economics Unit 5 Flashcards

If an economy is in long-run equilibrium, which of the following combinations of policy actions will necessarily result in inflation in the short run?

Given the situation illustrated in the graph and holding all other influences constant, which of the following policies will restore the macroeconomic equilibrium to full employment?

If the actual inflation rate is less than the expected inflation rate, which of the following must be true? Potential real output exceeds equilibrium real output.

Assume members of the Organization of the Petroleum Exporting Countries (OPEC) agree to a coordinated increase in oil production. If the economy is at equilibrium at point B, what effect will this have on the Phillips curve model in the long run?

According to the quantity theory of money, if the money supply is $40 billion, real output is $100 billion, and the price level is 1.2, what is the velocity of money?

Country X's economy is currently at full employment. Assume Country X's central bank increases the money supply by 2 percent over a prolonged period. According to the quantity theory of money, which of the following will happen in the long run for a given velocity of money?

Which of the following is true about the national debt of the United States? It is the accumulation of past and current budget deficits and surpluses.

Which of the following will most likely occur if a government adopts an annually balanced budget rule that requires the government to eliminate any deficits or surpluses?

If the total of government spending plus government transfer payments is less than tax revenues, which of the following must be true? The government budget is in surplus.

The United States national debt is the amount of money owed to holders of United States government securities.

Assume a country's government has a balanced budget. If the economy goes into a recession, what will happen to the government's budget in the short run?

Assume a country's banking system has limited reserves. If the government has increased the budget deficit and interest rates have remained constant, which of the following is true? Government spending is greater than tax revenue, and the central bank increases the money supply.

Crowding out occurs when government borrowing to finance its spending decreases private sector investment

An increase in government spending financed by increased borrowing will most likely change the real interest rate and the gross private domestic investment in which of the following ways?

If investment demand becomes less responsive to changes in interest rates, which of the following is true? An expansionary fiscal policy results in less crowding out.

Which of the following describes the effect of an increase in a government's budget deficit on the real interest rate and private investment?

Increases in human capital can be achieved by improving the quality of job-training programs.

Economic growth is best defined as

Country A's growth rate in per capita real gross domestic product (GDP) has been consistently higher than that of Country B. Which of the following factors can account for these differences in the per capita GDP growth rates?

Economic growth refers to an increase in which of the following?

If an economy experiences an improvement in technology, what will happen to its production possibilities curve (PPC) and its long-run aggregate supply (LRAS) curve?

If the government offers a tax credit to businesses, what will be the most likely effects of this action?

An increase in which of the following would be most likely to increase long-run growth?

Policymakers concerned about fostering long-run growth in an economy that is currently in a recession would most likely recommend which of the following combinations of monetary and fiscal policy actions?

If marginal business tax rates are decreased, how will aggregate supply and employment change in the long run?