Question

1- Suppose a prolonged war in a country destroys its significant capital stock. In the long run therefore.
a) the price level will decrease as both long-run and short-run aggregate supply decrease.

b) the price level will decrease as short-run aggregate supply decrease.
c) the price level will remain unchanged as as both long-run and short-run aggregate supply decrease.
d) the price level will increase as both long-run and short-run aggregate supply decrease.

2- Money eliminated the need for the double coincidence of wants through its role as
a) Fiat money
b) a medium of exchage.
c) a unit of account.
d) A store of value.

3- What are fedral funds?
a) Feadral funds are any funds printed by the fedral government.
b) Feadral funds are Fedral Reserve deposits at private banks.
c) Fedral Funds are privet bank deposits at the Fed.
d) Fedral funds are very shrt-term loans between commercial bank and though the Fed.

4- During which of the situations would you advise for expansionary fiscal policy?
a) When current output it above full-employment output.
b) When the economy is overeating
c) When inflation rate is vary high.
d) When the current unemplpyment rate is above the natural rate of unemployment.

Answer 1

Question 1: Suppose a prolonged war in a country destroys its significant capital stock. In the long run:

Answer: (d) The price level will increase as both long-run and short-run aggregate supply decrease.

Question 2: Money eliminated the need for the double coincidence of wants through its role as:

Answer: (b) a medium of exchange.

Question 3: What are federal funds?

Answer: (c) Federal Funds are privet bank deposits at the Fed.

Question 4: During which of the situations would you advise for expansionary fiscal policy?

Answer: (d) When the current unemployment rate is above the natural rate of unemployment.