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

Figure 34-2. 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 34-2. Assume the money market is always in equilibrium. Under the assumptions of the model,

Which of the following shifts aggregate demand to the right?

A policy that results in slow and steady growth of the money supply is an example of

If the Fed conducts open-market purchases, the money supply

According to the theory of liquidity preference, a decrease in the price level causes the

Figure 34-7 -Refer to Figure 34-7. Which of the following is correct?

If the price level rises, then

Unemployment insurance and welfare programs work as automatic stabilizers.

The multiplier effect is exemplified by the multiplied impact on

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?

According to liquidity preference theory,

Figure 34-2. 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 34-2. Which of the following quantities is held constant as we move from one point to another on either graph?

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

How does a reduction in the money supply by the Fed make owning stocks less attractive?

A decrease in taxes ____ aggregate demand through larger _____ by households.

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

Other things the same, a decrease in the U.S. interest rate

Suppose that the Federal reserve is concerned about the effects of falling stock prices on the economy. What could it do?

As the interest rate falls,

When there is an excess supply of money,