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Multiple Choice (3 questions)-Macroeconomics

1) If the Fed printed too much money, money's relative price would _________ and the money price of goods would ___________.
a. fall; rise
b. rise; fall
c. fall; fall
d. rise; rise

2) If workers begin to expect more inflation in the future, then we would expect that:
a. the short-run aggregate supply curve will shift up.
b. the short-run aggregate supply curve will shift down.
c. the short-run aggregate supply curve will not shift.
d. the aggregate demand curve will shift left.

3) A fiscal policy that reduces a budget deficit could conceivably __________ income if interest rates ______________.
a. increase; fall enough
b. increase; rise enough
c. decrease; fall too much
d. decrease; rise enough

Solution Preview

1. a Because there would be an over supply of money, we would see the relative value of money decline. The number of dollars needed to buy the same goods would therefore increase.

2. a When workers expect prices to ...

Solution Summary

Questions dealing with inflation, money supply, and the budget deficit