Question

1. There is uncertainty about the precise level of the natural rate of unemployment.

True

False

2. In the Keynesian view, a leftward shift in Aggregate Demand does NOT lead to falling prices since the short run Aggregate Supply curve is vertical.

True

False

3. Supply Side Economics is the idea that increasing tax rates will cause people to work more and produce more, to maintain a constant real income, increasing aggregate output in the economy.

True

False

4. Bank Reserves plus Currency in Circulation = “Monetary Base"

True

False

5. "Classical Economists" feel the increasing U.S. real estate prices from 2002 to 2006 were primarily caused by a speculative bubble and irrational behavior.

True

False

6. "Quantitative Easing" is characterized by increased the money supply; and primarily describes expansionary monetary policy.

True

False

Answer 1

1. TRUE

2. FALSE because short run aggregate supply curve is upward sloping and therefore, leftward shift in aggregate demand cause fall in prices and fall in output.

3. FALSE Supply side economies is the idea of increasing production . Its tools are tax cuts and deregulation. So, the tax increase will not implies the idea of supply side economies.

4. FALSE Bank reserves is the sum of amount that is deposited in the bank and not lent out to the clients.

5. TRUE

6. TRUE because quantitative easing implies the monetary policy in which central bank purchases govt. securities and ncrease the money supply.