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Econ 201 Quiz 1-4 Questions and Correct
Answers/ Latest Update / Already Graded
Other things the same, as the price level decreases it induces greater
spending on
a. net exports but not investment.
b. investment but not net exports.
c. both net exports and investment.
d. neither net exports nor investment.
Ans: c
In the short run, a decrease in the money supply causes interest rates
to
a. increase, and aggregate demand to shift right.
b. increase, and aggregate demand to shift left.
c. decrease, and aggregate demand to shift right.
d. decrease, and aggregate demand to shift left.
Ans: b
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Political Instability Abroad
Suppose that political instability in other countries makes people fear
for the value of their assets in these countries so that they desire to
purchase more U.S assets.
Refer to Political Instability Abroad. What would the change in the
interest rate created by foreigners wanting to buy more U.S. assets do
to investment spending in the U.S.?
a. make it rise which by itself would increase U.S. aggregate demand.
b. make it fall which by itself would increase U.S. aggregate demand.
c. make it fall which by itself would decrease U.S. aggregate demand.
d. make it rise which by itself would decrease U.S. aggregate demand.
Ans: b
The recessions of the 1970s are often attributed to
a. declining inflation expectations.
b. decreases in the money supply.
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c. declines in the price of stock.
d. an increase in oil prices.
Ans: d
When the price level falls, people want to
a. hold less money and the quantity of aggregate goods and services
demanded increases.
b. hold more money and the quantity of aggregate goods and services
demanded increases.
c. hold more money and the quantity of aggregate goods and services
demanded decreases.
d. hold less money and the quantity of aggregate goods and services
demanded decreases.
Ans: a
According to the theory of liquidity preference, if output decreases
a. people want to hold less money. This response is shown as a
movement along the money demand curve.
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b. people want to hold more money. This response is shown as a
movement along the money demand curve.
c. people want to hold less money. This response is shown as a shift of
the money demand curve.
d. people want to hold more money. This response is shown as a shift
of the money demand curve.
Ans: c
When the price level falls
a. the interest rate rises, so the quantity of goods and services demand
rises.
b. the interest rate rises, so the quantity of goods and services demand
falls.
c. the interest rate falls, so the quantity of goods and services demand
falls.
d. the interest rate falls, so the quantity of goods and services demand
rises.
Ans: d
Which of the following is an example of a decrease in government
purchases?
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Econ 201 Quiz 1-4 Questions and Correct
Answers/ Latest Update / Already Graded
Other things the same, as the price level decreases it induces greater
spending on
a. net exports but not investment.
b. investment but not net exports.
c. both net exports and investment.
d. neither net exports nor investment.
Ans: c
In the short run, a decrease in the money supply causes interest rates
to
a. increase, and aggregate demand to shift right.
b. increase, and aggregate demand to shift left.
c. decrease, and aggregate demand to shift right.
d. decrease, and aggregate demand to shift left.
Ans: b
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, Page |2
Political Instability Abroad
Suppose that political instability in other countries makes people fear
for the value of their assets in these countries so that they desire to
purchase more U.S assets.
Refer to Political Instability Abroad. What would the change in the
interest rate created by foreigners wanting to buy more U.S. assets do
to investment spending in the U.S.?
a. make it rise which by itself would increase U.S. aggregate demand.
b. make it fall which by itself would increase U.S. aggregate demand.
c. make it fall which by itself would decrease U.S. aggregate demand.
d. make it rise which by itself would decrease U.S. aggregate demand.
Ans: b
The recessions of the 1970s are often attributed to
a. declining inflation expectations.
b. decreases in the money supply.
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c. declines in the price of stock.
d. an increase in oil prices.
Ans: d
When the price level falls, people want to
a. hold less money and the quantity of aggregate goods and services
demanded increases.
b. hold more money and the quantity of aggregate goods and services
demanded increases.
c. hold more money and the quantity of aggregate goods and services
demanded decreases.
d. hold less money and the quantity of aggregate goods and services
demanded decreases.
Ans: a
According to the theory of liquidity preference, if output decreases
a. people want to hold less money. This response is shown as a
movement along the money demand curve.
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b. people want to hold more money. This response is shown as a
movement along the money demand curve.
c. people want to hold less money. This response is shown as a shift of
the money demand curve.
d. people want to hold more money. This response is shown as a shift
of the money demand curve.
Ans: c
When the price level falls
a. the interest rate rises, so the quantity of goods and services demand
rises.
b. the interest rate rises, so the quantity of goods and services demand
falls.
c. the interest rate falls, so the quantity of goods and services demand
falls.
d. the interest rate falls, so the quantity of goods and services demand
rises.
Ans: d
Which of the following is an example of a decrease in government
purchases?
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