Need help with questions for study guide.

1 . During recessions

a. profits fall, sales rise.

b. sales rise, profits fall.

c. sales and profits fall.

d. sales and profits rise.

2. When prices in the United States fall relative to foreign prices

a. net exports rise, which decreases the aggregate quantity of goods and services demanded.

b. net exports fall, which increases the aggregate quantity of goods and services demanded.

c. net exports fall, which decreases the aggregate quantity of goods and services demanded.

d. net exports rise, which increases the aggregate quantity of goods and services demanded.

3. In the short-run an increase in the cost of production such as the price of oil makes

a. output and prices rise.

b. output rise and prices fall.

c. output and prices fall.

d. output fall and prices rise.

4. The position of the long-run aggregate supply curve

a. shifts to left when immigration increases.

b. is determined by resource usage and technology.

c. is at the point where the unemployment rate is the greatest.

d. shifts to the right when the money supply increases.

5. The long-run aggregate supply curve

a. is vertical.

b. is a graphical representation of the classical dichotomy.

c. Indicates monetary neutrality in the long run.

d. All of the above are correct.

6. Fiscal policy is determined by

a. The president and Congress and involves changing government spending and Taxation.

B. The Federal Reserve and involves changing government spending and taxation.

C. The Federal Reserve and involves changing the money supply.

D. The president and Congress and involves changing the money supply.

7. Suppose that the Federal reserve is concerned about the effects of falling stock prices on the economy. What could it do?

A. Sell bonds to raise the interest rate.

B. Buy bonds to lower the interest rate.

C. Sell bonds to raise the interest rate.

D. buy bonds to raise the interest rate.

8. Which of the following Fed actions would both decrease the money supply?

A. Buy bonds and raise the reserve requirement.

B. Sell bonds and raise the reserve requirements.

C. Sell bonds and lower the reserve requirements.

D. Buy bonds and lower the reserve requirements.

9. An example of an automatic stabilizer is

A. A decrease in tax rates in response to a recession.

B. A decrease in money demand.

C. Unemployment benefits.

D. A lowering of interest rate by the fed.

10. If theMPC= 0.75, then the government purchases multiplier is about

A. 4.

B. 3.

C. 7.

D 1.33.

11 . An increase in the money supply will

A. Reduce interest rates, increasing investment and aggregate demand.

B. Increase interest rates, increasing investment and aggregate demand.

C. Increase interest rates, decreasing investment and aggregate demand.

D. Reduce interest rates, decreasing investment and increasing aggregate demand.