Question

In order A,B,C, or D multiple choice questions.

1. An increase in money supply will cause the following in the Money Market

   		decrease in interest rates and decrease in quantity of money
   		decrease in interest rates and increase in quantity of money
   		increase in interest rates and decrease in quantity of money
   		increase in interest rates and increase in quantity of money

QUESTION 29

1. Under this idea an increase in prices reduces real wages causing firms to increase production and employment

   		sticky wage theory
   		misperception theory
   		sticky price theory
   		sticky interest rate theory

QUESTION 30

1. Which of the following is not a benefit of efficiency wages?

   		higher wages reduce worker turnover
   		healthy workers are less productive
   		higher wages make workers more eager to keep their jobs
   		higher wages attract better quality workers

QUESTION 31

1. During this part of the business cycle economic activity is at its lowest; real GDP is at a minimum; employment, profits, and productive capacity use are low.

   		expansion phase
   		peak phase
   		trough phase
   		recession phase

QUESTION 32

1. An increase in natural resources will lead to the following:

   		increase in equilibrium price level and increase in equilibrium quantity
   		increase in equilibrium price level and decrease in equilibrium quantity
   		decrease in equilibrium price level and decrease in equilibrium quantity
   		decrease in equilibrium price level and increase in equilibrium quantity

Answer 1

28) option B is correct. When there is an increase in the money supply, money supply curve will shift out resulting in excess money supplied at the current interest rate. This drives the rate of interest down.

29) option A is correct. Nominal wages are sticky and unchanged in the short run so when there is a price increase the real wages are reduced.

30) option b is not correct. Healthy workers are actually more productive

31) option C is correct. Because it is given that real GDP is at its minimum it should be a trough

32) option d is correct. This will increase the production capacity which means short run and long run aggregate supply curve will shift to the right. Price should be lower and quantity should be higher.