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

Which of the following policies would stabilization policy activists support when the economy is experiencing unemployment above the natural rate?

Which of the following is not a reason the aggregate demand curve slopes downward? As the price level increases

If the Fed conducts open-market purchases which of these there increases in the short run: interest rates,prices,and investment spending?

For the following questions, consult the diagram below: Figure 34-1 -Refer to Figure 34-1.At an interest rate of 4 percent there is excess

When the interest rate increases,the opportunity cost of holding money

To reduce the effects of crowding out caused by an increase in government expenditures,the Federal Reserve could

Permanent tax cuts shift the AD curve

If the interest rate increases

In liquidity preference theory,an increase in the interest rate,other things the same,decreases the quantity of money demanded,but does not shift the money demand curve.

If expected inflation is constant,then when the nominal interest rate increases,the real interest rate

If the stock market crashes,

As the MPC gets close to 1,the value of the multiplier approaches

The interest rate would fall and the quantity of money demanded would

For the following questions, consult the diagram below: Figure 34-1 -Refer to Figure 34-1.Which of the following is correct?

Which of the following statements is correct?

The theory of liquidity preference illustrates the principle that

Keynes argued that aggregate demand is

Unemployment insurance and welfare programs work as automatic stabilizers.

If net exports fall $20 billion and the MPC is 7/10 and there is a multiplier effect,but no crowding out and no investment accelerator,then

Assume that the MPC is 0.75.Assume that there is a multiplier effect and that the total crowding-out effect is $6 billion.An increase in government purchases of $10 billion will shift aggregate demand