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1. Which of the following statements is not true?


1. When the relative increase in the price level is greater than the relative increase in the nominal money supply, the real money supply decreases


2. When the relative increase in the nominal money supply is greater than the the relative increase in the price level, the real money supply increases


3. When the price level decreases, ceteris paribus, the real money supply decreases


4. When the price level increases, ceteris paribus, the real money supply decreases


2. An increase in the price level


1. Reduces the real money supply and shifts the LM schedule rightward


2. Reduces the real money supply and shifts the LM schedule leftward


3. Increase the real money supply and shifts the LM schedule righward


4. Increase the real money supply and shifts the LM schedule leftward




3. The short-run labor supply function is


1. Positively sloped because of the disutility of work


2. Negatively sloped because of the disutility of work


3. Positively sloped because of the disutility of leisure


4. Negativley sloped because of the disutility of leisure




4. The demand for labor schedule


1. Shifts leftward when the price level rises


2. Shifts rightward when the price level rises


3. Shifts rightward when there is a proportionate increase in the price level and the nominal wage


4. Shifts leftward when there is a proportionate increase in the price level and the nominal wage




5. When the marginal physical product of labor is 800 - 2 L, the price of goods is $2, and the cost of labor is $4 per unit, the quantity of labor employed is


1. 20 units


2. 399 units


3. 800 units


4. 80 units




6. Aggregate demand is


1. Negatively related to the price level because a decline in the price level has a negative effect on the demand for output


2. Negatively related to the price level because a decline in the price level has a positive effect on the demand for output


3. Positively related to the price level because a decline in the price level has a negative effect on the demand for output


4. Positively related to the price level because a decline in the price has a positive effect on the demand for output




7. The slope of aggregate demand becomes flatter


1. The more sensitive investment spending is to the rate of interest


2. The more sensitive the demand for money is to the rate of interest


3. The smaller the value of the expenditure multiplier


4. The larger the nominal money supply




8. Aggregate demand shifts


1. Roightward when government spending decreases


2. Leftward when the price level increases, ceteris paribus


3. Leftward when there is a decrease in taxes, ceteris paribus


4. Rightward when the nominal money supply increases, ceteris paribus




9. A neoclassical aggregate supply schedule exists


1. At an output level which is associated with zero rate of unemployment


2. At an output level determine by the supply of and demand for labor


3. When the demand-for-labor and supply-of-labor schedules adjust immediately to a change in the price level


4. When equilibrium in the labor markets is unaffected by a shift of the supply of labor schedule




10. Aggregate supply is positively related to the price level when


1. Frictional and structural unemployment exists


2. The supply of labor schedule adjusts immediately to a change in the demand for labor


3. The demand for labor schedule adjusts immediately to the price level, and the labor supply schedule does not


4. The supply of labor schedule adjusts immediately to the price level, and the demand for labor does not