Question 41

An economy in long-run equilibrium experiences a cost-push inflation shock. If a feedback rule monetary policy that focuses on the price level is in place, which of the following effects of the monetary policy change is least likely?

A)    Real gross domestic product decreases and the inflation decreases.

B)   The price level decreases and output remains unchanged.

C)   The rate of money supply growth decreases.

D)   Aggregate demand decreases.

Question 42

The velocity of money is the:

A)    rate at which the price index for consumer goods rises.

B)   output expansion multiple of government expenditures.

C)   average number of times a dollar is used to purchase goods and services.

D)   number of times a dollar is taken out of the country during a year.

Question 43

The advantages of a proprietorship are least likely to include:

A)    ease of formation.

B)   simple decision making process.

C)   single taxation of profits.

D)   limited liability.

Question 44

In theory, the supply of a non-renewable resource is:

A)    fixed over a specific period of time.

B)   perfectly inelastic at a price that equals the present value of the expected next-period price.

C)   perfectly elastic.

D)   perfectly inelastic at the price where demand intersects supply.

Question 45

Question 45

Demand-pull inflation would least likely be caused by an increase in:

A)    the prices of raw materials.

B)   the money supply.

C)   government purchases.

D)   foreign incomes.

[此贴子已经被作者于2008-11-8 9:51:39编辑过]

答案和详解如下！

Question 41

An economy in long-run equilibrium experiences a cost-push inflation shock. If a feedback rule monetary policy that focuses on the price level is in place, which of the following effects of the monetary policy change is least likely?

A)    Real gross domestic product decreases and the inflation decreases.

B)   The price level decreases and output remains unchanged.

C)   The rate of money supply growth decreases.

D)   Aggregate demand decreases.

The correct answer was B) The price level decreases and output remains unchanged.

A feedback rule that focuses on the price level dictates a decrease in money supply growth in response to the increase in the price level that would result from an input price shock. Aggregate demand decreases as a result. In this case, the new equilibrium is at a lower price level (lower inflation) but with output (GDP growth) reduced further.

This question tested from Session 6, Reading 28, LOS a, (Part 2)

Question 42

The velocity of money is the:

A)    rate at which the price index for consumer goods rises.

B)   output expansion multiple of government expenditures.

C)   average number of times a dollar is used to purchase goods and services.

D)   number of times a dollar is taken out of the country during a year.

The correct answer was C) average number of times a dollar is used to purchase goods and services

This is the basic definition of the velocity of money.

This question tested from Session 6, Reading 25, LOS c

Question 43

The advantages of a proprietorship are least likely to include:

A)    ease of formation.

B)   simple decision making process.

C)   single taxation of profits.

D)   limited liability.

The correct answer was D) limited liability.

The advantages of a proprietorship is that it’s easy to establish, it has a simple decision making process, and profits are only taxed once. A disadvantage is that the owner has unlimited liability for the firm’s debt.

This question tested from Session 4, Reading 16, LOS e, (Part 2)

Question 44

In theory, the supply of a non-renewable resource is:

A)    fixed over a specific period of time.

B)   perfectly inelastic at a price that equals the present value of the expected next-period price.

C)   perfectly elastic.

D)   perfectly inelastic at the price where demand intersects supply.

The correct answer was C) perfectly elastic.

For a non-renewable resource the supply curve is perfectly elastic at a price that equals the present value of the expected next-period price and the quantity supplied depends on the demand at that price.

This question tested from Session 5, Reading 21, LOS g

Question 45

Demand-pull inflation would least likely be caused by an increase in:

A)    the prices of raw materials.

B)   the money supply.

C)   government purchases.

D)   foreign incomes.

The correct answer was A) the prices of raw materials
Demand-pull inflation results from an increase in aggregate demand. Increasing aggregate demand could be caused by increases in the money supply, government purchases, or foreign incomes (which would increase net exports). Increases in the price of raw materials are a cause of cost-push inflation.

This question tested from Session 6, Reading 26, LOS b

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