Suppose an economy's marginal propensity to consume (MPC) is 0.6. Then 1 + MPC + MPC2 + MPC3 = 2.176 and, if we continued adding up terms in this geometric series, we would get closer and closer to the multiplier value of

A) 1.96. B) 3. C) 1.67. D) 2.5. A) 1.96. B) 3. C) 1.67. D) 2.5.

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

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

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Question 81

Which of the following events shifts aggregate demand rightward?

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Question 82

An increase in the money supply shifts the aggregate-supply curve to the right.

(True/False)

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Question 83

Explain how unemployment insurance acts as an automatic stabilizer.

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Question 84

According to the Theory of Liquidity Preference, a fall in the _ reduces the amount of money that people wish to hold. As a result, falling interest rates stimulates investment spending and aggregate _.

(Short Answer)

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Question 85

To reduce aggregate demand, the government may reduce _ or increase _.

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Question 86

According to liquidity preference theory, if there were a surplus of money, then

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Question 87

For a country such as the U.S., the wealth effect exerts a very important influence on the slope of the aggregate-demand curve, since U.S. wealth is large relative to wealth in most other countries.

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Question 88

Which of the following illustrates how the investment accelerator works?

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Question 89

When the Federal Funds rate is above the Federal Reserve's target, it will bonds to _ the money supply.

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Question 90

If the MPC is 4/5, the multiplier is 5/4.

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Question 91

An increase in taxes shifts the aggregate _ curve to the _.

(Short Answer)

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Question 92

When the Fed increases the money supply, the interest rate decreases. This decrease in the interest rate increases consumption and investment demand, so the aggregate-demand curve shifts to the right.

(True/False)

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Question 93

A tax cut shifts the aggregate demand curve the farthest if

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Question 94

Other things the same, an increase in the price level causes the real value of the dollar to fall in the market for foreign-currency exchange.

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Question 95

An essential piece of the liquidity preference theory is the demand for money.

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Question 96

Suppose an economy's marginal propensity to consume (MPC) is 0.6. Then 1 + MPC + MPC² + MPC³ = 2.176 and, if we continued adding up terms in this geometric series, we would get closer and closer to the multiplier value of

(Multiple Choice)

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Question 97

Suppose that the government spends more on a missile defense program. What does this do to aggregate demand? How is your answer affected by the presence of the multiplier, crowding-out, taxes, and investment-accelerator effects?

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Question 98

Figure 34-11 -Refer to Figure 34-11. Suppose the multiplier is 5 and the economy is currently at point A. To stabilize output at $1000, the government should _ purchases by $_.

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Question 99

Other things equal, the higher the price level, the higher is the real wealth of households.

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Question 100

Showing 81 - 100 of 207

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

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

Which of the following events shifts aggregate demand rightward?

An increase in the money supply shifts the aggregate-supply curve to the right.

Explain how unemployment insurance acts as an automatic stabilizer.

According to the Theory of Liquidity Preference, a fall in the _____ reduces the amount of money that people wish to hold. As a result, falling interest rates stimulates investment spending and aggregate _____.

To reduce aggregate demand, the government may reduce _____ or increase _____.

According to liquidity preference theory, if there were a surplus of money, then

For a country such as the U.S., the wealth effect exerts a very important influence on the slope of the aggregate-demand curve, since U.S. wealth is large relative to wealth in most other countries.

Which of the following illustrates how the investment accelerator works?

When the Federal Funds rate is above the Federal Reserve's target, it will ____ bonds to _____ the money supply.

If the MPC is 4/5, the multiplier is 5/4.

An increase in taxes shifts the aggregate _____ curve to the _____.

When the Fed increases the money supply, the interest rate decreases. This decrease in the interest rate increases consumption and investment demand, so the aggregate-demand curve shifts to the right.

A tax cut shifts the aggregate demand curve the farthest if

Other things the same, an increase in the price level causes the real value of the dollar to fall in the market for foreign-currency exchange.

An essential piece of the liquidity preference theory is the demand for money.

Suppose an economy's marginal propensity to consume (MPC) is 0.6. Then 1 + MPC + MPC2 + MPC3 = 2.176 and, if we continued adding up terms in this geometric series, we would get closer and closer to the multiplier value of

Suppose that the government spends more on a missile defense program. What does this do to aggregate demand? How is your answer affected by the presence of the multiplier, crowding-out, taxes, and investment-accelerator effects?

Figure 34-11 ​ -Refer to Figure 34-11. Suppose the multiplier is 5 and the economy is currently at point A. To stabilize output at $1000, the government should _____ purchases by $_____.

Other things equal, the higher the price level, the higher is the real wealth of households.

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 Nations 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

According to the Theory of Liquidity Preference, a fall in the _ reduces the amount of money that people wish to hold. As a result, falling interest rates stimulates investment spending and aggregate _.

To reduce aggregate demand, the government may reduce _ or increase _.

When the Federal Funds rate is above the Federal Reserve's target, it will bonds to _ the money supply.

An increase in taxes shifts the aggregate _ curve to the _.

Suppose an economy's marginal propensity to consume (MPC) is 0.6. Then 1 + MPC + MPC² + MPC³ = 2.176 and, if we continued adding up terms in this geometric series, we would get closer and closer to the multiplier value of

Figure 34-11 -Refer to Figure 34-11. Suppose the multiplier is 5 and the economy is currently at point A. To stabilize output at $1000, the government should _ purchases by $_.