1) Suppose the economy is experiencing inflation. Which of the following would b
ID: 1214294 • Letter: 1
Question
1) Suppose the economy is experiencing inflation. Which of the following would be a corrective measure by the central monetary authority?
conducting an open market sale of government securities .
2)The law of increasing opportunity cost :
decreases the total output of goods and services available to the world economy.
3) The multiplier effect:
is output multiplied by the economic activity we are considering.
4)Demand-pull inflation is the result of:
15. A nation, as a whole, increases its purchasing power when it,
16. When wages rise faster than labor productivity, one would expect:
17. If the economy was in a recession, which of the following would be the best corrective measure, by the central monetary authority?
18. In aggregate demand and supply model, there exists an inverse and direct relationship between which two variables?
19. Which of the following would cause an increase in the supply of a particular product?
20. Households begin to change their attitude towards thrift, and increase their level of savings. What may follow?
conducting loose money policy lowering the required reserve ratio. reducing the discount rate.conducting an open market sale of government securities .
2)The law of increasing opportunity cost :
increases a country's dependence on markets and trade. increases the scarcity problem. reduces opportunity of other nations. in order to produce more of one good, must give up, more of another good.decreases the total output of goods and services available to the world economy.
3) The multiplier effect:
is the portion of total spending going toward the purchasing power of imports. allows for an increase in total output and income since wages and other incomes tend to fall. equals the changes in total spending divided by the changes in total output. refers to the fact that a change in non-income determined spending, leads to a larger change in total output and employment.is output multiplied by the economic activity we are considering.
4)Demand-pull inflation is the result of:
too few dollars chasing too many goods. a complete recession followed by an increase in the tax rate too much unemployment and under spending. too many dollars chasing too few goods. increase in the interest rate for borrowing money.15. A nation, as a whole, increases its purchasing power when it,
Increases its income prints more money increases the size of each output of goods and services decreases the velocity of money reduces the size of the deficit.16. When wages rise faster than labor productivity, one would expect:
cost-push inflation labor cost to fall production will stop demand-pull inflation some prices to fall as production rises17. If the economy was in a recession, which of the following would be the best corrective measure, by the central monetary authority?
Increase aggregate supply. Raise the federal funds rate. Buy bonds. Sell bonds. Lower the tax rate.18. In aggregate demand and supply model, there exists an inverse and direct relationship between which two variables?
Inflation and interest rates Real GDP and production possibilities curve Unemployment and real GDP Real GDP and the price level The US and Japan19. Which of the following would cause an increase in the supply of a particular product?
irregularity of technology. sellers increase the price due to a surge in demand. an unexpected decrease in the number of sellers in the market. the profit on another product the seller produces increases. an increase in the number of sellers in the market20. Households begin to change their attitude towards thrift, and increase their level of savings. What may follow?
Unemployment may reduce the price level. Economic growth will follow, causing a shortage in the labor market. Production may follow, leading to an increase in output. The economy may l expand to a new peak. A recession may follow.Explanation / Answer
Multiple questions asked.
First 4 are answered below.
1. Conducting an open market sale of government securities (as it will reduce the money supply and thus inflation in the economy)
2. In order to produce more of one good, must give up, more of another good (which makes the cost of opportunity lost higher)
3. Refers to the fact that a change in non-income determined spending, leads to a larger change in total output and employment.
4. too many dollars chasing too few goods (which implies AD is greater than AS, leading to inflation)
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