Click on the correct option. Text colour will change into green if your chosen option is corret and if it is wrong, it will change into red:

1. When there is full employment and aggregate supply is vertical, a decrease in taxes


1. Increases the price level and real output


2. Increases the price level but has no effect on real output


3. Increases real output but has no effect on the price level


4. Has no effect on the price level or real output


2. When there is full employment and aggregate supply is vertical, a 10% increase in the nominal money supply


1. Has no effect upon the price level


2. Increases the rate of interest


3. Increases the nominal wage 10%


4. Increases the real money supply 10%




3. When there is full employment and aggregate supply is vertical, an increase in government spending


1. Pushes up the rate of interest, which changes the composition of output


2. Increases the real money supply, which changes the composition of output


3. Has no effect on the real money supply or the composition of output


4. Has no effect on the rate of interest or the composition of output




4. When there is full employment and aggregate supply is vertical, an increase in the nominal money supply


1. Increases the real money supply, which changes the composition of output


2. Has no effect on the real money supply or the composition of output


3. Causes a proportional increase in real output


4. Reduces the rate of interest and changes the composition of output




5. When there is full employment and aggregate supply is positively sloped, a decrease in taxes increases


1. The price level and output


2. The price level but has no effect on output


3. Output but has no effect on the price level


4. The nominal and real wage




6. When there is full employment and aggregate supply is positively sloped, an increase in government spending


1. Decreases output and the price level


2. Decreases output and the real wage


3. Increases output and the real wage


4. Increases output and the price levl




7. When there is full employment and aggregate supply is positively sloped, a rightward shift of aggregate demand increases


1. The real wage, the employment of labor, and real output


2. The nominal wage, the employment of labor, and real output


3. The productivity of labor and real output


4. The demand for labor, the employment of labor, and the real wage




8. When aggregate supply is positively sloped and there is an increase in the per-unit cost of materials, aggregate supply shifts


1. Rightward, the price level falls, and output increases


2. Leftward, the price level falls, and output increases


3. Rightward, the price level increases, and output decreases


4. Leftward, the price level increases, and output decreases




9. When aggregate supply is positively sloped and there is a decrease in the mark-up on variable cost, aggregate supply shifts


1. Leftward, the price level falls, and real output increases


2. Roghtward, the price level falls, and real output increases


3. Leftward, the price level increases, the real output decreases


4. Rightward, the price level increases, and real output decreases




10. Which of the following statements about the labor markets is false?


1. The imperfect knowledge model contends that nominal wages adapt to changes in the price level


2. In a rational expectations model, aggregate supply may be positively sloped in the short run because of forecasting errors


3. In the "new classical" macroeconomics, aggregate supply is positively sloped in the long run


4. Contemporary Keynesian macroeconomics attributes the positively sloped aggregate supply schedule to nominal wage contracts