answer+page--unit+five


 * Answer Page--Unit Five

1. D 2. B 3. C 4. E 5. D 6. B 7. C 8. C 9. A 10. B 11. E** __16. The Phillips curve shows that the rate of inflation and the rate of unemployment are__ _ A) Negatively Related __17. If inflationary expectations increase, the Phillips curve will__ A) Shift to the Left __18. A traditional Phillips curve compares what two things?__ E) Unemployment and Inflation Rate __19. A traditional Laffer Curve compares what two things?__ C) Revenue and Tax Rates __20. Which of these cause large budget deficits?__

I. Wars II. Recessions III. Lack of fiscal discipline

E) I, II, and III __21. What is the definition of Growth Accounting?__ D) The bookkeeping of the supply-side elements that contribute to changes in Real GDP. __22. Examples of U.S. Securities are?__ E) All of the above __23. In the equation MV=PQ, the V stands for what?__ C) Velocity of Money __24. How would Mainstream Macroeconomists view the private economy?__ A) Potentially Unstable __25. How would Monetarists view the velocity of Money?__ B) Stable 26. A decrease in which of the following would most likely increase long-run economic growth? B) Interest rates* 27. Define inflation B) An increase in the general level of prices, leading to a reduction of currency's purchasing power. 28. The main measure of inflation in the United States is the: A) Consumer Price Index 29. C 30. D 31. A 32. B 33. E 34. A 35. C 36. D 37. The result of a series of adverse aggregate supply shocks in the economy would be? B) A leftward movement of the short run aggregate supply curve. 38. Labor productivity is determined by all of the following factors except: D) The current inflation rate* 39. Which of the following explains why inflation can increase? I. Increase in aggregate supply II. Increase in aggregate demand III. Decrease in rate of money supply growth B) II only* 40. If other things are equal, a decrease in the price level will: C) Cause a movement down along a short-run aggregate supply curve.* 41. Which of these is a supply factor in economic growth? I. the stock of capital II. aggregate expenditures III. the size of the labor force C) I and III only* 42. When is the long-run Phillips Curve vertical? B) At the natural rate of unemployment* 43. In reference to the Laffer Curve, a decline in the tax rate would most likely result in: D) Greatly increase tax revenue.*

Miller Lane(44-53) 44. Given that nominal GDP is 6 trillion, real GDP is 5 trillion, and the money supply is 1 trillion, the velocity of money is
 * __E) 6__**

45. Monetarists believe
 * __C) that changes in the velocity of money are small and predictable__**

46. Use the following values for a hypothetical economy M=$200 V=5 C=$640 Ig=$80 G=$40 Xn=$40 Given this information, if the price level is 4, real GDP is
 * __B) $250__**

47. The new classical view shows that
 * __E) the long-run aggregate supply curve is vertical__**

48. A decrease in the duration of unemployment benefits __**B) lowers both the natural rate of unemployment and inflation **__

49. For a given expected inflation rate and a given natural unemployment rate, an increase in actual unemployment
 * __C) lowers inflation__**

50. An increase in productivity **__E) does not change the natural rate of unemployment__**

51. Which of the following causes the inflation rate to increase?
 * __D) l ower unemployment rate __**

52. Over the past decade, the aggregate supply and aggregate demand curves have shifted outward as shown in the diagram. Using this knowledge and the graph above we can conclude that
 * __C) real GDP grew at a faster rate than nominal GDP__**

53. Based on the information given in the diagrams, the most likely cause of a shift from long-run aggregate supply curve X to curve Y is
 * __A) an increase in labor productivity__

54. Assume that the economy is initially at Point A, a shift to point B would: B) A decrease in aggregate demand

55. The above graph is a: D) Laffer Curve **