Question 1

G in the aggregate demand equation represents

Accepted Answer

A)  federal government spending. 
B)  state government spending. 
C)  local government spending. 
D)  all of the above. 
A)  federal government spending. 
B)  state government spending. 
C)  local government spending. 
D)  all of the above.

Question 2

Interest rates are negatively related to I and NX.

Accepted Answer

A) True 
 B)False

Question 3

If autonomous consumption is $200, disposable income is $1000 and the marginal propensity to consume is 0.9, then consumption is

Accepted Answer

A)  $900. 
B)  $1,000. 
C)  $1100. 
D)  $1,200. 
A)  $900. 
B)  $1,000. 
C)  $1100. 
D)  $1,200.

Question 4

If the marginal propensity to consume rises, then the consumption function on the Keynesian cross diagram

Accepted Answer

A)  shifts up. 
B)  shifts down. 
C)  becomes flatter. 
D)  becomes steeper. 
A)  shifts up. 
B)  shifts down. 
C)  becomes flatter. 
D)  becomes steeper.

Question 5

In the Keynesian cross model, if consumers save a larger portion of disposable income, equilibrium GDP rises.

Accepted Answer

A) True 
 B)False

Question 6

If interest rates rise, which of the following would fall?

Accepted Answer

A)  mpc 
B)  investment 
C)  imports 
D)  government spending 
A)  mpc 
B)  investment 
C)  imports 
D)  government spending

Question 7

Net exports is

Accepted Answer

A)  imports minus exports. 
B)  exports minus inputs. 
C)  consumption minus exports. 
D)  exports minus consumption. 
A)  imports minus exports. 
B)  exports minus inputs. 
C)  consumption minus exports. 
D)  exports minus consumption.

Question 8

In the Keynesian cross model, if taxes rise the same amount as government spending, the equilibrium output falls.

Accepted Answer

A) True 
 B)False

Question 9

One reason investment is inversely related to the interest rate is that higher interest rates mean a higher cost of borrowing.

Accepted Answer

A) True 
 B)False

Question 10

If the mpc is 0.75, and government spending and taxes both rise by $100, then equilibrium output

Accepted Answer

A)  falls by $100. 
B)  falls by $25. 
C)  rises by $25. 
D)  rises by $100. 
A)  falls by $100. 
B)  falls by $25. 
C)  rises by $25. 
D)  rises by $100.

Question 11

When taxes increase and all else stays constant, the IS curve

Accepted Answer

A)  shifts to the left. 
B)  shifts to the right. 
C)  stays the same. 
D)  none of the above. 
A)  shifts to the left. 
B)  shifts to the right. 
C)  stays the same. 
D)  none of the above.

Question 12

The G in the equation for the components of aggregate demand should include state and local government spending.

Accepted Answer

A) True 
 B)False

Question 13

Aggregate demand is composed of consumption, investment, government spending and imports.

Accepted Answer

A) True 
 B)False

Question 14

A high interest rate is associated with a strong currency, which leads to low net exports.

Accepted Answer

A) True 
 B)False

Question 15

Explain the difference between a fiscal stimulus and a monetary stimulus.

Accepted Answer

A fiscal stimulus includes dec

G in the aggregate demand equation represents

Interest rates are negatively related to I and NX.

If autonomous consumption is $200, disposable income is $1000 and the marginal propensity to consume is 0.9, then consumption is

If the marginal propensity to consume rises, then the consumption function on the Keynesian cross diagram

In the Keynesian cross model, if consumers save a larger portion of disposable income, equilibrium GDP rises.

If interest rates rise, which of the following would fall?

Net exports is

In the Keynesian cross model, if taxes rise the same amount as government spending, the equilibrium output falls.

One reason investment is inversely related to the interest rate is that higher interest rates mean a higher cost of borrowing.

If the mpc is 0.75, and government spending and taxes both rise by $100, then equilibrium output

When taxes increase and all else stays constant, the IS curve

The G in the equation for the components of aggregate demand should include state and local government spending.

Aggregate demand is composed of consumption, investment, government spending and imports.

A high interest rate is associated with a strong currency, which leads to low net exports.

Explain the difference between a fiscal stimulus and a monetary stimulus.

The Financial System

Money

Interest Rates

The Economics of Interest-Rate Fluctuations

The Economics of Interest-Rate Spreads and Yield Curves

Rational Expectations, Efficient Markets, and the Valuation of Corporate Equities

Financial Structure, Transaction Costs, and Asymmetric Information

Bank Management

Innovation and Structure in Banking and Finance

The Economics of Financial Regulation

Financial Derivatives

Financial Crises: Causes and Consequences

Central Bank Form and Function

The Money Supply Process and the Money Multipliers

Monetary Policy Tools

Monetary Policy Targets and Goals

Foreign Exchange

International Monetary Regimes

Money Demand

Is-Lm in Action

Aggregate Supply and Demand and the Growth Diamond

Monetary Policy Transmission Mechanisms

Inflation and Money

Rational Expectations Redux: Monetary Policy Implications

Filters

Exam 21: Is-Lm

G in the aggregate demand equation represents

Interest rates are negatively related to I and NX.

If autonomous consumption is $200, disposable income is $1000 and the marginal propensity to consume is 0.9, then consumption is

If the marginal propensity to consume rises, then the consumption function on the Keynesian cross diagram

In the Keynesian cross model, if consumers save a larger portion of disposable income, equilibrium GDP rises.

If interest rates rise, which of the following would fall?

Net exports is

In the Keynesian cross model, if taxes rise the same amount as government spending, the equilibrium output falls.

One reason investment is inversely related to the interest rate is that higher interest rates mean a higher cost of borrowing.

If the mpc is 0.75, and government spending and taxes both rise by $100, then equilibrium output

When taxes increase and all else stays constant, the IS curve

The G in the equation for the components of aggregate demand should include state and local government spending.

Aggregate demand is composed of consumption, investment, government spending and imports.

A high interest rate is associated with a strong currency, which leads to low net exports.

Explain the difference between a fiscal stimulus and a monetary stimulus.

The Financial System

Money

Interest Rates

The Economics of Interest-Rate Fluctuations

The Economics of Interest-Rate Spreads and Yield Curves

Rational Expectations, Efficient Markets, and the Valuation of Corporate Equities

Financial Structure, Transaction Costs, and Asymmetric Information

Bank Management

Innovation and Structure in Banking and Finance

The Economics of Financial Regulation

Financial Derivatives

Financial Crises: Causes and Consequences

Central Bank Form and Function

The Money Supply Process and the Money Multipliers

Monetary Policy Tools

Monetary Policy Targets and Goals

Foreign Exchange

International Monetary Regimes

Money Demand

Is-Lm in Action

Aggregate Supply and Demand and the Growth Diamond

Monetary Policy Transmission Mechanisms

Inflation and Money

Rational Expectations Redux: Monetary Policy Implications

Filters