Exam 21: The Influence of Monetary and Fiscal Policy on Aggregate Demand

Assume the MPC is 0.75. Assuming only the multiplier effect matters, a decrease in government purchases of $100 billion will shift the aggregate demand curve to the

The Employment Act of 1946 states that

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

Figure 21-6. 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 21-6. Suppose the graphs are drawn to show the effects of an increase in government purchases. If it were not for the increase in r from r₁ to r₂, then

According to the theory of liquidity preference, which variable adjusts to balance the supply and demand for money?

When the interest rate is below the equilibrium level,

When the Fed sells government bonds, the reserves of the banking system

According to liquidity preference theory, the slope of the money demand curve is explained as follows:

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

According to liquidity preference theory, if the price level increases, then the equilibrium interest rate

When the Fed lowers the growth rate of the money supply, it must take into account

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

Which of the following sequences best represents the crowding-out effect?

Other things the same, which of the following responses would we expect to result from an decrease in U.S. interest rates?

The process of the investment accelerator involves

Which of the following actions might we logically expect to result from rising stock prices?

Which of the following events would shift money demand to the left?

According to the theory of liquidity preference, an increase in the price level causes the

There is an increase in government expenditures financed by taxes and its overall short-run effect on output is larger than the change in government spending. Which of the following is correct?

Figure 21-2. 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 21-2. As we move from one point to another along the money-demand curve MD₁,