ECON 400 MODULE 4 QUIZ QUESTIONS & ANSWERS
If there is an unanticipated increase in aggregate demand, which of the following is
most likely to occur? - Answers - an increase in employment
Which of the following would be most likely to cause a reduction in current aggregate
demand in the United States? - Answers - increased fear of a recession
The actions of borrowers and lenders are coordinated by - Answers - the interest rate in
the loanable funds market.
An unanticipated increase in the level of prices in the goods and services market, which
results in a temporary reduction in real wage rates, will - Answers - result in an actual
rate of unemployment that is less than the natural rate of unemployment.
Once decision-makers fully adjust to an increase in the general price level, - Answers -
output will return to the full-employment level.
The inflationary premium is that portion of the interest rate that reflects - Answers -
expected annual rate of decline in the purchasing power of money while a loan is
outstanding.
If resource prices are fixed and the product selling price rises, then - Answers - profits
will increase.
Suppose business decision-makers become more optimistic about future economic
conditions and desire additional funds to expand their plant capacity. What is the likely
effect on the loanable funds market? - Answers - The demand for loanable funds will
increase, and the interest rate will rise.
The market for labor services is included in the - Answers - resource market.
Other things equal, which of the following is true? - Answers - A reduction in prices will
increase the real wealth of those holding a fixed quantity of money.
In the context of aggregate supply, the short run is defined as the period during which -
Answers - some prices are set by contracts and cannot be adjusted.
The international substitution effect exists because a - Answers - lower price level will
make domestically produced goods less expensive relative to foreign goods.
Since the end of World War II, the U.S. has almost always had rising prices and an
upward trend in real GDP. To explain this - Answers - both aggregate demand and long-
run aggregate supply must be shifting right and aggregate demand must shift farther.
If there is an unanticipated increase in aggregate demand, which of the following is
most likely to occur? - Answers - an increase in employment
Which of the following would be most likely to cause a reduction in current aggregate
demand in the United States? - Answers - increased fear of a recession
The actions of borrowers and lenders are coordinated by - Answers - the interest rate in
the loanable funds market.
An unanticipated increase in the level of prices in the goods and services market, which
results in a temporary reduction in real wage rates, will - Answers - result in an actual
rate of unemployment that is less than the natural rate of unemployment.
Once decision-makers fully adjust to an increase in the general price level, - Answers -
output will return to the full-employment level.
The inflationary premium is that portion of the interest rate that reflects - Answers -
expected annual rate of decline in the purchasing power of money while a loan is
outstanding.
If resource prices are fixed and the product selling price rises, then - Answers - profits
will increase.
Suppose business decision-makers become more optimistic about future economic
conditions and desire additional funds to expand their plant capacity. What is the likely
effect on the loanable funds market? - Answers - The demand for loanable funds will
increase, and the interest rate will rise.
The market for labor services is included in the - Answers - resource market.
Other things equal, which of the following is true? - Answers - A reduction in prices will
increase the real wealth of those holding a fixed quantity of money.
In the context of aggregate supply, the short run is defined as the period during which -
Answers - some prices are set by contracts and cannot be adjusted.
The international substitution effect exists because a - Answers - lower price level will
make domestically produced goods less expensive relative to foreign goods.
Since the end of World War II, the U.S. has almost always had rising prices and an
upward trend in real GDP. To explain this - Answers - both aggregate demand and long-
run aggregate supply must be shifting right and aggregate demand must shift farther.
