Exam 6: Introduction to Macroeconomics

If business leaders become pessimistic about future sales and profits, they will __________ spending on plant and equipment, which __________ employment and income and, therefore, their expectations are __________.

The aim of supply-side economics is to

Given the aggregate demand curve, an increase in aggregate supply lowers the price level and decreases output.

In the 1960s, government policy makers believed that they could

During a given period in the economy, aggregate output is the

Exhibit 5-1 -In Exhibit 5-1 in period 4, the price level starts at ______ and ends up at ______ when the aggregate supply curve shifts from AS' to AS''.

The economy is so __________ that we need to __________ matters.

A fall in the price level

Equilibrium of aggregate supply and aggregate demand is best described as a situation in which

During the Great Depression,

If tax revenues increase more than government spending does, the price level will rise.

Which of the following is a flow variable?

Keynes believed that the best method for ending the Great Depression was to reduce government spending and raise taxes, thereby reducing the federal budget deficit.

Which of the following is not true about recessions?

The policy that a nation's economic vitality would spring from the stock of precious metals accumulated in the public treasury is called monetarism.

Stagflation is best described as

President Nixon fought the inflation of the early 1970s with

The Reagan tax cut of 1981 was an attempt at supply-side economics.

An increase in government spending, other things constant, would cause a

Which of the following explains why the aggregate demand curve slopes downward?