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Question : 21.ClassicaleconomistDavidHumeobservedthatasthemoneysupplyexpandedaftergolddiscoveriesittooksometimeforpricestoriseandinthemeantimetheeconomyenjoyedhigheremploymentandproduction.Thisisinconsistentwithmonetaryneutrality : 1262188

Economics

 

21.ClassicaleconomistDavidHumeobservedthatasthemoneysupplyexpandedaftergolddiscoveriesittooksometimeforpricestoriseandinthemeantimetheeconomyenjoyedhigheremploymentandproduction.Thisisinconsistentwithmonetaryneutralitybecause

a.monetaryneutralitywouldmeanthatneitherpricesnorproductionshouldhaverisen.

b.monetaryneutralitywouldmeanthatproductionshouldhaverisen,butpricesshouldnothave.

c.monetaryneutralitywouldmeanthepricesshouldhaverisen,butproductionshouldnothavechanged.

d.monetaryneutralitywouldmeanthatpricesandproductionshouldbothhavefallen.

22.ClassicaleconomistDavidHumeobservedthatasthemoneysupplyexpandedaftergolddiscoveries

a.pricesandoutputbothincreasedimmediately.

b.pricesincreasedimmediatelywhileoutputremainedunchanged.

c.ittooktimeforpricestorise;inthemeantimeoutputwaslower.

d.ittooktimeforpricestorise;inthemeantimeoutputwashigher.

23.Realandnominalvariablesarehighlyintertwined,andchangesinthemoneysupplychangerealGDP.Mosteconomistswouldagreethatthisstatementaccuratelydescribes

a.boththeshortrunandthelongrun.

b.theshortrun,butnotthelongrun.

c.thelongrun,butnottheshortrun.

d.neitherthelongrunnortheshortrun.

24.Inordertounderstandhowtheeconomyworksintheshortrun,weneedto

a.studytheclassicalmodel.

b.studyamodelinwhichrealandnominalvariablesinteract.

c.understandthat“moneyisaveil.”

d.understandthatmoneyisneutralintheshortrun.

25.Wedepartfromtheassumptionsofclassicaleconomicswhenwefocusontherelationshipbetween

a.thequantityofoutputandthepricelevel.

b.thequantityofoutputandtheunemploymentrate.

c.thepricelevelandtheinflationrate.

d.inflationandthenominalinterestrate.

26.Themodelofshort-runeconomicfluctuationsfocuseson

a.thepricelevelandrealGDP.

b.productivityandeconomicgrowth.

c.theneutralityofmoneyandinflation.

d.Noneoftheaboveiscorrect.

27.Whenlookingatagraphofaggregatedemand,whichofthefollowingiscorrect?

a.Therearenominalvariablesonboththeverticalandthehorizontalaxes.

b.Therearerealvariablesonboththeverticalandhorizontalaxes.

c.Thevariableontheverticalaxisisnominal;thevariableonthehorizontalaxisisreal

d.Thevariableontheverticalaxisisreal;thevariableonthehorizontalaxisisnominal

28.Theaveragepricelevelismeasuredby

a.thepriceofoil.

b.therateofinflation.

c.thenominalinterestrate.

d.theGDPdeflator.

29.Theaggregatedemandandaggregatesupplygraphhas

a.thepricelevelonthehorizontalaxis.ThepricelevelcanbemeasuredbytheGDPdeflator.

b.thepricelevelonthehorizontalaxis.ThepricelevelcanbemeasuredbyrealGDP.

c.thepricelevelontheverticalaxis.ThepricelevelcanbemeasuredbytheGDPdeflator.

d.thepricelevelontheverticalaxis.ThepricelevelcanbemeasuredbyGDP.

30.Theaggregatedemandandaggregatesupplygraphhas

a.quantityofoutputonthehorizontalaxis.OutputcanbemeasuredbytheGDPdeflator.

b.quantityofoutputonthehorizontalaxis.OutputcanbemeasuredbyrealGDP.

c.quantityofoutputontheverticalaxis.OutputcanbemeasuredbytheGDPdeflator.

d.quantityofoutputontheverticalaxis.OutputcanbemeasuredbyrealGDP.

 

 

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