Exam 24: The Influence of Monetary and Fiscal Policy on Aggregate Demand

An implication of the Employment Act of 1946 is that the government should respond to changes in the private economy to stabilize aggregate demand.

If the marginal propensity to consume is 6/7,then the multiplier is 7.

The lag problem associated with fiscal policy is due mostly to

Opponents of active stabilization policy

Which of the effects listed below increases the quantity of goods and services demanded when the price level falls and decreases the quantity of goods and services demanded when the price level rises?

For the U.S.economy,which of the following helps explain the slope of the aggregate-demand curve?

Other things the same,during recessions taxes tend to

Most economists believe that fiscal policy

Government expenditures on capital goods such as roads could increase aggregate supply.Such effects on aggregate supply are likely to matter more in the short run than in the long run.

Monetary policy affects the economy with a long lag,in part because

The multiplier effect

If there is excess money supply,people will

Explain why the interest rate is the opportunity cost of holding currency.What is the benefit of holding currency?

The interest rate falls if

According to the theory of liquidity preference,if the interest rate rises