ASU ECON 211 PROFESSIONAL STUDY SHEET QUESTIONS AND DETAILED SOLUTIONS

ASU ECON 211 PROFESSIONAL STUDY
SHEET QUESTIONS AND DETAILED
SOLUTIONS

●● Which of the following statements about the monetarist view of the
macroeconomy is incorrect?
A. the money wage rate is sticky
B. left alone, the economy rarely operates at full employment
C. taxes should be kept low to avoid disincentive effects that decrease
potential GDP
D. all recessions result from inappropriate monetary policy.
Answer: Left alone, the economy rarely operates at full employment


●● An increase in expected future income ___ aggregate demand.
Answer: increases


●● An increase in expected future inflation rate ___ aggregate demand
Answer: increases


●● An increase in expected future profits ___ aggregate demand.
Answer: increases

, ●● An increase in the price level when the money wage rate remains
unchanged increases ___.
Answer: the quantity of real GDP supplied


●● When unwanted inventories up, ___. Prices___.
Answer: the quantity of real GDP is supplied is greater that the quantity
of real GDP demanded: fall


●● With a rise in the money wage rate, ___.
Answer: the quantity that firms are willing to supply at each price level
decreases.


●● A ____ macroeconomist believes that the economy is self-regulating
and always at full employment
Answer: classical


●● A ____ macroeconomist believes that the economy requires active
help from fiscal policy and monetary policy to make full employment
Answer: Keynesian


●● T/F
The quantity of real GDP demandes is the sum of the real consumption
expenditure, investment, government expenditure, and exports minus
imports