Filters
Question type
Study Flashcards

An increase in government spending initially and primarily shifts


A) aggregate demand to the right.
B) aggregate demand to the left.
C) aggregate supply to the right.
D) neither aggregate demand nor aggregate supply in either direction.

E) None of the above
F) All of the above

Correct Answer

verifed

verified

Other things the same, which of the following happens if the price level falls?


A) Money demand shifts rightward.
B) Initially there is an excess demand for money in the money market.
C) The interest rate falls.
D) None of the above is correct.

E) None of the above
F) B) and C)

Correct Answer

verifed

verified

If the Fed conducts open-market purchases, then which of the following quantities increase(s) ?


A) interest rates and investment spending
B) interest rates, but not investment spending
C) investment spending, but not interest rates
D) neither interest rates nor investment spending

E) All of the above
F) C) and D)

Correct Answer

verifed

verified

Scenario 16-1. Take the following information as given for a small, imaginary economy: Scenario 16-1. Take the following information as given for a small, imaginary economy: -Refer to Scenario 16-1. For this economy, an initial increase of $500 in net exports translates into a A) $2,000 increase in aggregate demand when the crowding-out effect is taken into account. B) $2,500 increase in aggregate demand when the crowding-out effect is taken into account. C) $2,000 increase in aggregate demand in the absence of the crowding-out effect. D) $2,500 increase in aggregate demand in the absence of the crowding-out effect. -Refer to Scenario 16-1. For this economy, an initial increase of $500 in net exports translates into a


A) $2,000 increase in aggregate demand when the crowding-out effect is taken into account.
B) $2,500 increase in aggregate demand when the crowding-out effect is taken into account.
C) $2,000 increase in aggregate demand in the absence of the crowding-out effect.
D) $2,500 increase in aggregate demand in the absence of the crowding-out effect.

E) B) and D)
F) B) and C)

Correct Answer

verifed

verified

There are three factors that help explain the slope of the aggregate demand curve. Which two are less important? Why are they less important?

Correct Answer

verifed

verified

The wealth effect and the exchange-rate ...

View Answer

The Federal Funds rate is the interest rate


A) banks charge each other for short-term loans.
B) the Fed charges depository institutions for short-term loans.
C) the Fed pays on deposits.
D) interest rate on 3 month Treasury bills.

E) A) and B)
F) B) and C)

Correct Answer

verifed

verified

An increase in the money supply decreases the equilibrium interest rate and shifts the aggregate-demand curve to the right.

A) True
B) False

Correct Answer

verifed

verified

In 2009 President Obama and Congress increased government spending. Some economists thought this increase would have little effect on output. Which of the following would make the effect of an increase in government expenditures on aggregate demand smaller?


A) the MPC is small and changes in the interest rate have a small effect on investment
B) the MPC is small and changes in the interest rate have a large effect on investment
C) the MPC is large and changes in the interest rate have a small effect on investment
D) the MPC is large and changes in the interest rate have a large effect on investment

E) None of the above
F) A) and D)

Correct Answer

verifed

verified

Monetary policy


A) can be implemented quickly and most of its impact on aggregate demand occurs very soon after policy is implemented.
B) can be implemented quickly, but most of its impact on aggregate demand occurs months after policy is implemented.
C) cannot be implemented quickly, but once implemented most of its impact on aggregate demand occurs very soon afterward.
D) cannot be implemented quickly and most of its impact on aggregate demand occurs months after policy is implemented.

E) None of the above
F) All of the above

Correct Answer

verifed

verified

A significant example of a temporary tax cut was the one announced in 1992 by President George H. W. Bush. The effect of that tax cut on consumer spending and aggregate demand was


A) zero.
B) likely smaller than if the cut had been permanent.
C) likely about the same as if the cut had been permanent.
D) likely larger than if the cut had been permanent.

E) A) and B)
F) A) and C)

Correct Answer

verifed

verified

The multiplier effect


A) and the crowding-out effect both amplify the effects of an increase in government expenditures.
B) and the crowding-out effect both diminish the effects of an increase in government expenditures.
C) diminishes the effects of an increase in government expenditures, while the crowding-out effect amplifies the effects.
D) amplifies the effects of an increase in government expenditures, while the crowding-out effect diminishes the effects.

E) B) and D)
F) C) and D)

Correct Answer

verifed

verified

An increase in the price level shifts the money demand curve to the left, causing interest rates to increase.

A) True
B) False

Correct Answer

verifed

verified

Critics of stabilization policy argue that


A) there is a lag between the time policy is passed and the time policy has an impact on the economy.
B) the impact of policy may last longer than the problem it was designed to offset.
C) policy can be a source of, instead of a cure for, economic fluctuations.
D) All of the above are correct.

E) B) and D)
F) B) and C)

Correct Answer

verifed

verified

If the interest rate increases


A) or if the price level increases, then people will want to hold more money.
B) or if the price level increases, then people will want to hold less money.
C) or if the price level decreases, then people will want to hold more money.
D) or if the price level decreases, then people will want to hold less money.

E) B) and C)
F) A) and D)

Correct Answer

verifed

verified

Figure 16-2. On the left-hand graph, MS represents the supply of money and MD represents the demand for money; on the right-hand graph, AD represents aggregate demand. The usual quantities are measured along the axes of both graphs. Figure 16-2. On the left-hand graph, MS represents the supply of money and MD represents the demand for money; on the right-hand graph, AD represents aggregate demand. The usual quantities are measured along the axes of both graphs. -Refer to Figure 16-2. Assume the money market is always in equilibrium, and suppose r<sub>1</sub> = 0.08; r<sub>2</sub> = 0.12; Y<sub>1</sub> = 13,000; Y<sub>2</sub> = 10,000; P<sub>1</sub> = 1.0; and P<sub>2</sub> = 1.2. Which of the following statements is correct? When P = P<sub>2</sub>, A) investment is lower than it is when P = P<sub>1</sub>. B) nominal output is higher than it is when P = P<sub>1.</sub> C) the expected rate of inflation is higher than it is when P = P<sub>1</sub>. D) the velocity of money is higher than it is when P = P<sub>1</sub>. -Refer to Figure 16-2. Assume the money market is always in equilibrium, and suppose r1 = 0.08; r2 = 0.12; Y1 = 13,000; Y2 = 10,000; P1 = 1.0; and P2 = 1.2. Which of the following statements is correct? When P = P2,


A) investment is lower than it is when P = P1.
B) nominal output is higher than it is when P = P1.
C) the expected rate of inflation is higher than it is when P = P1.
D) the velocity of money is higher than it is when P = P1.

E) None of the above
F) B) and C)

Correct Answer

verifed

verified

According to the theory of liquidity preference, if the interest rate rises


A) people want to hold more money. This response is shown by moving to the right along the money demand curve.
B) people want to hold more money. This response is shown by shifting the money demand curve right.
C) people want to hold less money. This response is shown by moving to the left along the money demand curve.
D) people want to hold less money. This response is shown by shifting the money demand curve left.

E) B) and D)
F) B) and C)

Correct Answer

verifed

verified

Government purchases are said to have a


A) multiplier effect on aggregate supply.
B) multiplier effect on aggregate demand.
C) liquidity-enhancing effect on aggregate supply.
D) liquidity-enhancing effect on aggregate demand.

E) B) and C)
F) None of the above

Correct Answer

verifed

verified

Supply-side economists believe that changes in government purchases affect


A) only aggregate demand.
B) only aggregate supply.
C) both aggregate demand and aggregate supply.
D) neither aggregate demand nor aggregate supply.

E) A) and D)
F) All of the above

Correct Answer

verifed

verified

The multiplier is computed as MPC / (1 - MPC).

A) True
B) False

Correct Answer

verifed

verified

Figure 16-5. On the figure, MS represents money supply and MD represents money demand. Figure 16-5. On the figure, MS represents money supply and MD represents money demand. -Refer to Figure 16-5. What is measured along the vertical axis of the graph? A) the quantity of output B) the amount of crowding out C) the interest rate D) the price level -Refer to Figure 16-5. What is measured along the vertical axis of the graph?


A) the quantity of output
B) the amount of crowding out
C) the interest rate
D) the price level

E) A) and B)
F) A) and C)

Correct Answer

verifed

verified

Showing 141 - 160 of 416

Related Exams

Exam 1

Ten Principles of Economics

347 Questions

Exam 2

Thinking Like an Economist

528 Questions

Exam 3

Interdependence and the Gains From Trade

413 Questions

Exam 4

The Market Forces of Supply and Demand

568 Questions

Exam 5

Measuring a Nations Income

428 Questions

Exam 6

Measuring the Cost of Living

420 Questions

Exam 7

Production and Growth

417 Questions

Exam 8

Saving, Investment, and the Financial System

473 Questions

Exam 9

The Basic Tools of Finance

419 Questions

Exam 10

Unemployment

562 Questions

Exam 11

The Monetary System

421 Questions

Exam 12

Money Growth and Inflation

384 Questions

Exam 13

Open-Economy Macroeconomic Models

447 Questions

Exam 14

A Macroeconomic Theory of the Open Economy

375 Questions

Exam 15

Aggregate Demand and Aggregate Supply

466 Questions

Exam 17

The Short-Run Trade-Off Between Inflation and Unemployment

367 Questions

Exam 18

Six Debates Over Macroeconomic Policy

235 Questions

Show Answer