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1. The government has just lowered personal income taxes. Which of the following best describes the effects that this policy has on the economy?
2. Which of the following are harmed by unexpectedly high rates of inflation?
3. Which of the following statements is true?
4. If your nominal income rises 4 percent and your real income falls 1 percent, by how much did the price level change?
5. Which of the following best measures changes in the price level of national product?
6. Which of the following lessens the impact of expansionary fiscal policy?
7. Suppose that the unemployment rate falls from 6 percent to 5 percent and the inflation rate falls from 3 percent to 2 percent. Which of the following best explains these trends?
8. A nation's economic growth can be seen as a(n)
9. Some economists believe that when aggregate demand declines, prices are inflexible or "sticky" in the downward direction. This implies that the short-run aggregate supply curve is
10. Which of the following policies best describes supply-side fiscal policy?
11. A likely cause of falling Treasury bond prices might be
12. The economy is currently operating at full employment. Assuming flexible wages and prices, how would a decline in aggregate demand affect GDP and the price level in the short run, and GDP and the price level in the long run?
SHORT-RUN GDP SHORT-RUN PRICE LEVEL LONG-RUN GDP LONG-RUN PRICE LEVEL