Question 1

The lag problem associated with monetary policy is due mostly to

Accepted Answer

A) the fact that business firms make investment plans far in advance. 
B) the political system of checks and balances that slows down the process of determining monetary policy. 
C) the time it takes for changes in government spending to affect the interest rate. 
D) All of the above are correct. 
A) the fact that business firms make investment plans far in advance. 
B) the political system of checks and balances that slows down the process of determining monetary policy. 
C) the time it takes for changes in government spending to affect the interest rate. 
D) All of the above are correct.

Question 2

An increase in the MPC

Accepted Answer

A) increases the multiplier, so that changes in government expenditures have a larger effect on aggregate demand. 
B) increases the multiplier, so that changes in government expenditures have a smaller effect on aggregate demand. 
C) decreases the multiplier, so that changes in government expenditures have a larger effect on aggregate demand. 
D) decreases the multiplier, so that changes in government expenditures have a smaller effect on aggregate demand. 
A) increases the multiplier, so that changes in government expenditures have a larger effect on aggregate demand. 
B) increases the multiplier, so that changes in government expenditures have a smaller effect on aggregate demand. 
C) decreases the multiplier, so that changes in government expenditures have a larger effect on aggregate demand. 
D) decreases the multiplier, so that changes in government expenditures have a smaller effect on aggregate demand.

Question 3

"Monetary policy can be described either in terms of the money supply or in terms of the interest rate." This statement amounts to the assertion that

Accepted Answer

A) rightward shifts of the money-supply curve cannot occur if the Federal Reserve decides to target an interest rate. 
B) the activities of the Federal Reserve's bond traders are irrelevant if the Federal Reserve decides to target an interest rate. 
C) changes in monetary policy aimed at expanding aggregate demand can be described either as increasing the money supply or as increasing the interest rate. 
D) our analysis of monetary policy is not fundamentally altered if the Federal Reserve decides to target an interest rate. 
A) rightward shifts of the money-supply curve cannot occur if the Federal Reserve decides to target an interest rate. 
B) the activities of the Federal Reserve's bond traders are irrelevant if the Federal Reserve decides to target an interest rate. 
C) changes in monetary policy aimed at expanding aggregate demand can be described either as increasing the money supply or as increasing the interest rate. 
D) our analysis of monetary policy is not fundamentally altered if the Federal Reserve decides to target an interest rate.

The lag problem associated with monetary policy is due mostly to

An increase in the MPC

"Monetary policy can be described either in terms of the money supply or in terms of the interest rate." This statement amounts to the assertion that

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Applications: the Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers in Microeconomics

Measuring a Nation S Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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Exam 34: The Influence of Monetary and Fiscal Policy on Aggregate Demand

The lag problem associated with monetary policy is due mostly to

An increase in the MPC

"Monetary policy can be described either in terms of the money supply or in terms of the interest rate." This statement amounts to the assertion that

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Applications: the Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers in Microeconomics

Measuring a Nation S Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters