Quiz 2 Econ 201
1.The aggregate expenditure model focuses on the relationship between ________ and ________ in the short run, assuming ________ is constant. A)
total income; real GDP; the price level
total production; total income; real GDP
total spending; real GDP; the price level
total spending; real GDP; total income
2.In 2001, Cisco Systems was surprised by a decline in demand for their equipment, resulting in an unexpected increase in inventories. This event resulted from A)
aggregate expenditure that was less than GDP.
aggregate expenditure that was greater than GDP.
spending that was greater production.
The key idea of the aggregate expenditure model is that in any particular year, the level of GDP is determined mainly by A)
the level of aggregate expenditure.
Which of the following is not one of the four main categories of spending identified by John Maynard Keynes? A)
A decrease in consumer confidence can put your job at risk if A)
consumers expect firms to increase investment in the future. B)
aggregate expenditures rise.
aggregate expenditures fall.
consumers expect their incomes to rise in the future.
During the Great Depression, economists first began studying the relationship between A)
changes in GDP and changes in interest rates
changes in nominal GDP and changes in real GDP
changes in aggregate expenditures and changes in GDP
changes in stock prices and changes in price controls
7.Household spending on goods and services is known as
planned investment spending.
8.The static aggregate demand and aggregate supply curve model helps explain A)
short term fluctuations in real GDP and the price level.
long term growth.
price fluctuations in an individual market.
output fluctuations in an individual market.
9.When GDP growth fell to 2.25 percent during the second half of 2006, FedEx anticipated that A)
the federal government would limit economic growth above 2.25 percent. B)
the business cycle would have no impact on profits.
businesses and firms would increase their demand for shipping services. D) its profit growth in 2007 would be lower than it had been in the previous decade
10.Whenthe economy enters a recession, your employer is ___________ to reduce your wages because _______. A)
unlikely; output and input prices generally fall during recession B)
unlikely; lower wages reduce productivity and morale
likely; output prices always fall during recession.
likely; aggregate demand is vertical in the long run.
its profit growth in 2007 would be lower than it had been in the previous decade.
11.The aggregate demand curve shows the relationship between the ________ and ________. A)
inflation rate; quantity of real GDP demanded
real interest rate: quantity of real GDP supplied
nominal interest rate; quantity of real GDP demanded
price level; quantity of real GDP demanded
12. During the currency crisis in Argentina in 2001, which of the following did NOT occur? A)
many people resorted to bartering to make exchanges.
one Argentine province issued its own currency.
the Argentine government limited the amount of Argentine currency that could be withdrawn from bank accounts. D)
banks increased lending to lessen...
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