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Multiple Choice Quiz
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1
Which of the following is NOT an issue in macroeconomics?
A)issues relating to the balance of payment
B)the determination of prices in the agricultural sector
C)the relationship between inflation and unemployment
D)the possible effect of budget deficit increases on the level of investment
2
In the very long run
A)the position of the AD-curve depends on the productive capacity of the economy
B)the position of the AS-curve depends on the degree of consumer confidence
C)the position of the AS-curve essentially determines the level of output
D)the position of the AD-curve is affected by changes in efficiency improvements
3
The position of the long-run AS-curve is determined by
A)the full-employment level of output
B)consumer confidence
C)fiscal policy
D)monetary policy
4
In the very short run
A)the position of the AD-curve determines the level of output
B)the position of the AD-curve cannot be changed by fiscal or monetary policy
C)a change in monetary policy will affect both the price level and the level of output
D)a change in fiscal policy will not change the level of output
5
In the very short run
A)the level of prices can change quite rapidly, but the level of output is fixed
B)the level of prices is unaffected by the level of output
C)the level of prices and the level of output change with a shift in aggregate demand
D)the level of prices and the level of output are both fixed
6
In the medium run, restrictive fiscal policy will cause
A)a decrease in the level of output but no change in the level of prices
B)a decrease in the level of prices but no change in the level of output
C)a decrease in both the level of prices and the level of output
D)a decrease in real GDP with no change in nominal GDP
7
In the medium run, monetary policy can be used to
A)shift the AD-curve, but this will only result in a price change, not in a change in real GDP
B)affect nominal GDP, but this will not have any effect on real GDP
C)lower the price level while increasing the level of real GDP
D)lower the price level but only at the cost of also lowering the level of real GDP
8
Periods of very high inflation rates
A)can only occur in a situation when the AS-curve is vertical
B)most often are caused by sharp increases in aggregate demand
C)can only occur if the output gap is large
D)most often occur when actual GDP is less than potential GDP
9
The size of the output gap is determined by
A)nominal GDP minus real GDP
B)potential GDP minus actual GDP
C)nominal GDP adjusted for inflation
D)actual output minus the output that could be produced if the capital stock remained constant
10
If we assume that the AD-curve remains constant over time, we can expect that
A)the level of GDP will not change over time
B)the price level will not change over time
C)the price level will steadily decline over time
D)the level of both output and prices will vary greatly as the long run AS-curve shifts unpredictably





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