Nominal wage = target real wage multiply by------------

• A) Expected price level.
• B) Labor.
• C) Price.
• D) Quantity.

Monetary policy is -------on output under-------------exchange rate.

• A) Totally ineffective; fixed
• B) More effective; real
• C) Totally ineffective; nominal
• D) More effective; fixed

When tax decreases then the disposable income (Yd) ----------and consumption---------

• A) Increases; increases
• B) Decreases; decreases
• C) Decreases; increases
• D) Increases; decrease

The primary result of inflation is a decline in the real value of --------

• A) Money.
• B) Product.
• C) Gold.
• D) Prices.

The accumulation of all ------------is known as government debt.

• A) Present deficits
• B) Past annual deficits
• C) Past annual surplus
• D) Annual surplus

Inflation resulting from ----------- is known as demand pull inflation.

• A) Supply shocks
• B) Supply
• C) Demand shocks
• D) Negative investment shock

When tax increases then disposable income (Yd) ----------and consumption---------

• A) Decreases; increases.
• B) Increases; increases
• C) Decreases; decreases.
• D) Increases; decreases.

In the Mundell Fleming model, LM* curve equation is----------

• A) M/P = L(r*, Y).
• B) M/P = L +(r* + Y).
• C) M/P = L(r* + Y).
• D) M/P = L(r* - Y).

Which one of the following statement is true?

• A) Aggregate demand has negative slope.
• B) IS curve is vertical.
• C) Aggregate demand is horizontal.
• D) Aggregate demand is vertical.

GP funds is the example of --------

• A) Balanced debt.
• B) Unfunded debt.
• C) Permanent debt.
• D) Floating debt.

If the -------------is not changing, it means that budget is balanced.

• A) Government debt
• B) Nominal government debt
• C) Real government debt
• D) Nominal government surplus

Income tax bond is the example of:

• A) Permanent debt.
• B) Floating debt.
• C) Balanced debt.
• D) Unfunded debt.

Which one of the following is the example of unfunded debt?

• A) Postal life insurance
• B) Income tax bonds
• C) Prize bonds
• D) Treasury bills

The sticky wage model of the aggregate supply says that when the -------- rises more than expected price, the real wage falls so employment ------

• A) Price level; falls.
• B) Expected price level; rises.
• C) Price level; rises.
• D) Expected price level; falls.

Inflation resulting from ------is known as cost push inflation.

• A) Supply shocks
• B) Negative investment shocks
• C) Demand shocks
• D) Positive shocks

Fiscal policy is ---------on output under-------------exchange rate.

• A) More effective; real
• B) Totally ineffective; nominal
• C) Totally ineffective; fixed
• D) More effective; fixed

As risk premium increases, interest rate increase, investment --------- and IS* curve shifts---------

• A) Decrease; leftward.
• B) Decrease; rightward.
• C) Increase; rightward.
• D) Increases; leftward.

In monopolistic competition, firms set their own---------. This is an example of the sticky-price model.

• A) Location
• B) Prices
• C) Revenue
• D) Size

The sticky wage model of the aggregate supply says that when the --------- less than expected price, the real wage raises so employment ------

• A) Expected price level; rises.
• B) Expected price level; falls.
• C) Price level; rises.
• D) Price level; falls.

The inverse relationship between inflation and unemployment is known as ------------

• A) IS curve.
• B) Demand curve.
• C) LM curve.
• D) Philips curve.