Exam 21: The Influences of Monetary and Fiscal Policy on Aggregate Demand: Part A

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Unemployment insurance benefits are an example of -----.

(Short Answer)

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Question 21

Suppose a wave of optimism causes firms to increase investment.To stabilize output and employment,the Federal Reserve will -----.

(Short Answer)

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Question 22

The goal of stabilization policy is to stabilize aggregate -----.As a result,stabilization policy will also stabilize ----- and -----.

(Short Answer)

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Question 23

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

(Short Answer)

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Question 24

Use the money market to explain the interest-rate effect and its relation to the slope of the aggregate demand curve.

(Essay)

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Question 25

Describe the process in the money market by which the interest rate reaches its equilibrium value if it starts above equilibrium.

(Essay)

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Question 26

The potential positive feedback that government spending may have on investment is known as the -----.The potential negative effect that government spending may have on investment is known as the ----- effect.

(Short Answer)

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Question 27

When the Federal Reserve conducts an open-market purchase,the money supply ----- and aggregate demand -----.

(Short Answer)

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Question 28

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

(Short Answer)

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Question 29

----- are changes in fiscal policy that stimulate aggregate demand when the economy goes into recession without policymakers having to take any deliberate action.

(Short Answer)

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Question 30

If the Federal Reserve's goal is to stabilize aggregate demand,then it will ----- the money supply in response to a stock market boom.This causes interest rates to -----.

(Short Answer)

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Question 31

An increase in households' desired money holding causes a(n)----- in interest rates.This causes a(n)----- in investment spending and aggregate demand.

(Short Answer)

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Question 32

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 33

A European recession that reduces U.S.net exports by $50 billion may ultimately lead to a $----- billion reduction in aggregate demand if the MPC is 0.75.

(Short Answer)

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Question 34

Open-market purchases cause a(n)----- in interest rates and a(n)----- in real GDP in the short run.

(Short Answer)

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Question 35

Suppose households attempt to increase money holdings.To stabilize output and employment,the Federal Reserve will -----.

(Short Answer)

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Question 36

A decrease in taxes will shift aggregate demand to the -----,cause consumption to -----,and cause output to -----.Due to the crowding-out effect,investment will -----.

(Short Answer)

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Question 37

The crowding-out effect occurs because an increase in government spending ----- interest rates,causing ----- to fall.

(Short Answer)

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Question 38

An open-market purchase by the Federal Reserve creates an excess ----- of money.This causes interest rates to ----- and investment to -----.The change in investment causes aggregate demand to shift to the -----.

(Short Answer)

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Question 39

To offset increased pessimism by households,the government may ----- government spending and/or ----- taxes.

(Short Answer)

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Question 40

Showing 21 - 40 of 60

Exam 21: The Influences of Monetary and Fiscal Policy on Aggregate Demand: Part A

Unemployment insurance benefits are an example of -----.

Suppose a wave of optimism causes firms to increase investment.To stabilize output and employment,the Federal Reserve will -----.

The goal of stabilization policy is to stabilize aggregate -----.As a result,stabilization policy will also stabilize ----- and -----.

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

Use the money market to explain the interest-rate effect and its relation to the slope of the aggregate demand curve.

Describe the process in the money market by which the interest rate reaches its equilibrium value if it starts above equilibrium.

The potential positive feedback that government spending may have on investment is known as the -----.The potential negative effect that government spending may have on investment is known as the ----- effect.

When the Federal Reserve conducts an open-market purchase,the money supply ----- and aggregate demand -----.

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

----- are changes in fiscal policy that stimulate aggregate demand when the economy goes into recession without policymakers having to take any deliberate action.

If the Federal Reserve's goal is to stabilize aggregate demand,then it will ----- the money supply in response to a stock market boom.This causes interest rates to -----.

An increase in households' desired money holding causes a(n)----- in interest rates.This causes a(n)----- in investment spending and aggregate demand.

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 -----.

A European recession that reduces U.S.net exports by $50 billion may ultimately lead to a $----- billion reduction in aggregate demand if the MPC is 0.75.

Open-market purchases cause a(n)----- in interest rates and a(n)----- in real GDP in the short run.

Suppose households attempt to increase money holdings.To stabilize output and employment,the Federal Reserve will -----.

A decrease in taxes will shift aggregate demand to the -----,cause consumption to -----,and cause output to -----.Due to the crowding-out effect,investment will -----.

The crowding-out effect occurs because an increase in government spending ----- interest rates,causing ----- to fall.

An open-market purchase by the Federal Reserve creates an excess ----- of money.This causes interest rates to ----- and investment to -----.The change in investment causes aggregate demand to shift to the -----.

To offset increased pessimism by households,the government may ----- government spending and/or ----- taxes.

Ten Principles of Economics

Ten Principles of Economics: How People Make Decisions

Ten Principles of Economics: How People Interact

Ten Principles of Economics: How the Economy As a Whole Works

Ten Principles of Economics: Part A

Ten Principles of Economics: Part B

Thinking Like an Economist

Thinking Like an Economist: The Economist As Scientist

Thinking Like an Economist: The Economist As Policy Adviser

Thinking Like an Economist: Why Economists Disagree

Thinking Like an Economist: Lets Get Going

Thinking Like an Economist: Graphing a Brief Review

Thinking Like an Economist: Part A

Thinking Like an Economist: Part B

Interdependence and the Gains From Trade

Interdependence and the Gains From Trade: A Parable for the Modern Economy

Interdependence and the Gains From Trade: Comparative Advantage the Driving Force of Specialization

Interdependence and the Gains From Trade: Applications of Comparative Advantage

Interdependence and the Gains From Trade: Conclusion

Interdependence and the Gains From Trade: Part A

Interdependence and the Gains From Trade: Part B

The Market Forces of Supply and Demand

The Market Forces of Supply and Demand:Markets and Competition

The Market Forces of Supply and Demand: Demand

The Market Forces of Supply and Demand: Supply

The Market Forces of Supply and Demand: Supply and Demand Together

The Market Forces of Supply and DemandConclusion How Prices Allocate Resources

The Market Forces of Supply and Demand: Part A

The Market Forces of Supply and Demand: Part B

Elasticity and Its Applications

Elasticity and Its Applications: The Elasticity of Demand

Elasticity and Its Applications: The Elasticity of Supply

Elasticity and Its Applications: Three Applications of Supply,demand,and Elasticity

Elasticity and Its Applications: Part A

Elasticity and Its Applications: Part B

Supply Demand and Government Policies

Supply Demand and Government Policies: Controls on Prices

Supply Demand and Government Policies: Taxes

Supply Demand and Government Policies: Part A

Supply Demand and Government Policies: Part B

Consumers Producers and the Efficiency of Markets

Consumers Producers and the Efficiency of Markets: Consumer Surplus

Consumers Producers and the Efficiency of Markets: Producer Surplus

Consumers Producers and the Efficiency of Markets: Market Efficiency

Consumers Producers and the Efficiency of Markets: Conclusion Market Efficiency and Market Failure

Consumers Producers and the Efficiency of Markets: Part A

Consumers Producers and the Efficiency of Markets: Part B

Application the Cost of Taxation

Application the Cost of Taxation: The Deadweight Loss of Taxation

Application the Cost of Taxation: The Determinants of the Deadweight Loss

Application the Cost of Taxation: Deadweight Loss and Tax Revenue As Taxes Vary

Application the Cost of Taxation: Conclusion

Application the Cost of Taxation: Part A

Application the Cost of Taxation: Part B

Application International Trade

Application International Trade: The Determinants of Trade

Application International Trade: The Winners and Losers From Trade

Application International Trade: The Arguments for Restricting Trade

Application International Trade: Conclusion