Question 1

When the economy is near capacity,the Fed would lower the interest rate in response to an increase in government spending.

Accepted Answer

A) True 
 B)False  False

Question 2

A decrease in net taxes at a given price level leads to

Accepted Answer

A) no change in aggregate demand. 
B) an increase in aggregate demand. 
C) a decrease in aggregate demand. 
D) a decrease in aggregate supply. 
A) no change in aggregate demand. 
B) an increase in aggregate demand. 
C) a decrease in aggregate demand. 
D) a decrease in aggregate supply. B

Question 3

In a binding situation,the interest rate is always zero.

Accepted Answer

A) True 
 B)False  True

Question 4

Refer to the information provided in Figure 13.2 below to answer the questions that follow.   Figure 13.2
-Refer to Figure 13.2.Planned investment would experience the greatest amount of crowding out when the aggregate demand curve shifts from

Accepted Answer

A) AD1 to AD2. 
B) AD3 to AD4. 
C) AD5 to AD6. 
D) The amount of crowding out is the same for all AD curve shifts shown in the figure. 
A) AD1 to AD2. 
B) AD3 to AD4. 
C) AD5 to AD6. 
D) The amount of crowding out is the same for all AD curve shifts shown in the figure.

Question 5

A decrease in the Z factors represents an easing of monetary policy.

Accepted Answer

A) True 
 B)False

Question 6

In a binding situation,an increase in net taxes

Accepted Answer

A) shifts the AD curve to the right. 
B) shifts the AD curve to the left. 
C) does not shift the AD curve. 
D) causes the AD curve to become horizontal. 
A) shifts the AD curve to the right. 
B) shifts the AD curve to the left. 
C) does not shift the AD curve. 
D) causes the AD curve to become horizontal.

Question 7

A decrease in net taxation increases aggregate demand.

Accepted Answer

A) True 
 B)False

Question 8

An increase in the Z factors represents

Accepted Answer

A) a tightening of monetary policy. 
B) an easing of monetary policy. 
C) an expansionary fiscal policy. 
D) a contractionary fiscal policy. 
A) a tightening of monetary policy. 
B) an easing of monetary policy. 
C) an expansionary fiscal policy. 
D) a contractionary fiscal policy.

Question 9

Which of the following is an example of an expansionary fiscal policy?

Accepted Answer

A) the Fed selling government securities in the open market 
B) the federal government increasing the marginal tax rate on incomes above $200,000 
C) the federal government increasing the amount of money spent on public health programs 
D) the federal government reducing pollution standards to allow firms to produce more output 
A) the Fed selling government securities in the open market 
B) the federal government increasing the marginal tax rate on incomes above $200,000 
C) the federal government increasing the amount of money spent on public health programs 
D) the federal government reducing pollution standards to allow firms to produce more output

Question 10

Refer to the information provided in Figure 13.1 below to answer the questions that follow.   Figure 13.1
-Refer to Figure 13.1.Suppose the economy is at Point A,an increase in the price level can cause a movement to Point

Accepted Answer

A) E. 
B) B. 
C) C. 
D) D. 
A) E. 
B) B. 
C) C. 
D) D.

Question 11

If a decrease in net taxes in the United States resulted in a very large increase in aggregate output and a very small increase in the price level,then the U.S.economy must have been

Accepted Answer

A) on the very steep part of the short-run aggregate supply curve. 
B) on the very flat part of the short-run aggregate supply curve. 
C) on the very steep part of the short-run aggregate demand curve. 
D) on the very flat part of the short-run aggregate demand curve. 
A) on the very steep part of the short-run aggregate supply curve. 
B) on the very flat part of the short-run aggregate supply curve. 
C) on the very steep part of the short-run aggregate demand curve. 
D) on the very flat part of the short-run aggregate demand curve.

Question 12

If firms increase their prices because of a change in inflationary expectations,the AS curve will shift to the left.

Accepted Answer

A) True 
 B)False

Question 13

Since 1970,the United States experienced stagflation

Accepted Answer

A) during all five recessionary periods. 
B) during none of the five recessionary periods. 
C) only during the first two recessionary periods. 
D) only during the most recent recessionary period. 
A) during all five recessionary periods. 
B) during none of the five recessionary periods. 
C) only during the first two recessionary periods. 
D) only during the most recent recessionary period.

Question 14

Rising output coupled with falling prices is called stagflation.

Accepted Answer

A) True 
 B)False

Question 15

Refer to the information provided in Figure 13.2 below to answer the questions that follow.   Figure 13.2
-Refer to Figure 13.2.Firms respond to a decrease in net taxes by mostly increasing output when the aggregate demand curve shifts from

Accepted Answer

A) AD1 to AD2. 
B) AD3 to AD4. 
C) AD5 to AD6. 
D) AD6 to AD1. 
A) AD1 to AD2. 
B) AD3 to AD4. 
C) AD5 to AD6. 
D) AD6 to AD1.

Question 16

Refer to the information provided in Figure 13.3 below to answer the questions that follow.   Figure 13.3
-Refer to Figure 13.3.Assume the economy is at Point A.Higher oil prices shift the aggregate supply curve to AS2.If the government decides to counter the effects of higher oil prices by increasing net taxes,then the price level will be ________ than P2 and output will be ________ than Y2.

Accepted Answer

A) greater;greater 
B) greater;less 
C) less;less 
D) less;greater 
A) greater;greater 
B) greater;less 
C) less;less 
D) less;greater

Question 17

A decrease in net taxes will result in consumption crowding out planned investment when the economy is on the steep part of the AS curve.

Accepted Answer

A) True 
 B)False

Question 18

Fiscal policy affects the goods market through

Accepted Answer

A) changes in money supply. 
B) changes in taxes and money supply. 
C) changes in government spending and money supply. 
D) changes in taxes and government spending. 
A) changes in money supply. 
B) changes in taxes and money supply. 
C) changes in government spending and money supply. 
D) changes in taxes and government spending.

Question 19

The Fed generally had high interest rates ________ as it fought inflation.

Accepted Answer

A) in the 1970s and early 1980s 
B) in the 1980s and 1990s 
C) in the late-1990s 
D) in the 2000s 
A) in the 1970s and early 1980s 
B) in the 1980s and 1990s 
C) in the late-1990s 
D) in the 2000s

Question 20

Refer to the information provided in Figure 13.1 below to answer the questions that follow.   Figure 13.1
-Refer to Figure 13.1.Suppose the economy is at Point A an increase in government purchases can cause a movement to Point

Accepted Answer

A) E. 
B) B. 
C) C. 
D) D. 
A) E. 
B) B. 
C) C. 
D) D.

When the economy is near capacity,the Fed would lower the interest rate in response to an increase in government spending.

A decrease in net taxes at a given price level leads to

In a binding situation,the interest rate is always zero.

Refer to the information provided in Figure 13.2 below to answer the questions that follow. Figure 13.2 -Refer to Figure 13.2.Planned investment would experience the greatest amount of crowding out when the aggregate demand curve shifts from

A decrease in the Z factors represents an easing of monetary policy.

In a binding situation,an increase in net taxes

A decrease in net taxation increases aggregate demand.

An increase in the Z factors represents

Which of the following is an example of an expansionary fiscal policy?

Refer to the information provided in Figure 13.1 below to answer the questions that follow. Figure 13.1 -Refer to Figure 13.1.Suppose the economy is at Point A,an increase in the price level can cause a movement to Point

If a decrease in net taxes in the United States resulted in a very large increase in aggregate output and a very small increase in the price level,then the U.S.economy must have been

If firms increase their prices because of a change in inflationary expectations,the AS curve will shift to the left.

Since 1970,the United States experienced stagflation

Rising output coupled with falling prices is called stagflation.

Refer to the information provided in Figure 13.2 below to answer the questions that follow. Figure 13.2 -Refer to Figure 13.2.Firms respond to a decrease in net taxes by mostly increasing output when the aggregate demand curve shifts from

A decrease in net taxes will result in consumption crowding out planned investment when the economy is on the steep part of the AS curve.

Fiscal policy affects the goods market through

The Fed generally had high interest rates ________ as it fought inflation.

Refer to the information provided in Figure 13.1 below to answer the questions that follow. Figure 13.1 -Refer to Figure 13.1.Suppose the economy is at Point A an increase in government purchases can cause a movement to Point

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand,supply,and Market Equilibrium

Demand and Supply Applications

Introduction to Macroeconomics

Measuring National Output and National Income

Unemployment, inflation, and Long-Run Growth

Aggregate Expenditure and Equilibrium Output

The Government and Fiscal Policy

The Money Supply and the Federal Reserve System

Money Demand and the Equilibrium Interest Rate

The Determination of Aggregate Output, the Price Level, and the Interest Rate

The Labor Market in the Macroeconomy

Financial Crises, stabilization, and Deficits

Household and Firm Behavior in the Macroeconomy: a Further Look

Long-Run Growth

Alternative Views in Macroeconomics

International Trade,comparative Advantage,and Protectionism

Open-Economy Macroeconomics: the Balance of Payments and Exchange Rates

Economic Growth in Developing and Transitional Economies

Filters

Exam 13: Policy Effects and Costs Shocks in the Asad Model

When the economy is near capacity,the Fed would lower the interest rate in response to an increase in government spending.

A decrease in net taxes at a given price level leads to

In a binding situation,the interest rate is always zero.

Refer to the information provided in Figure 13.2 below to answer the questions that follow. Figure 13.2 -Refer to Figure 13.2.Planned investment would experience the greatest amount of crowding out when the aggregate demand curve shifts from

A decrease in the Z factors represents an easing of monetary policy.

In a binding situation,an increase in net taxes

A decrease in net taxation increases aggregate demand.

An increase in the Z factors represents

Which of the following is an example of an expansionary fiscal policy?

Refer to the information provided in Figure 13.1 below to answer the questions that follow. Figure 13.1 -Refer to Figure 13.1.Suppose the economy is at Point A,an increase in the price level can cause a movement to Point

If a decrease in net taxes in the United States resulted in a very large increase in aggregate output and a very small increase in the price level,then the U.S.economy must have been

If firms increase their prices because of a change in inflationary expectations,the AS curve will shift to the left.

Since 1970,the United States experienced stagflation

Rising output coupled with falling prices is called stagflation.

Refer to the information provided in Figure 13.2 below to answer the questions that follow. Figure 13.2 -Refer to Figure 13.2.Firms respond to a decrease in net taxes by mostly increasing output when the aggregate demand curve shifts from

A decrease in net taxes will result in consumption crowding out planned investment when the economy is on the steep part of the AS curve.

Fiscal policy affects the goods market through

The Fed generally had high interest rates ________ as it fought inflation.

Refer to the information provided in Figure 13.1 below to answer the questions that follow. Figure 13.1 -Refer to Figure 13.1.Suppose the economy is at Point A an increase in government purchases can cause a movement to Point

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand,supply,and Market Equilibrium

Demand and Supply Applications

Introduction to Macroeconomics

Measuring National Output and National Income

Unemployment, inflation, and Long-Run Growth

Aggregate Expenditure and Equilibrium Output

The Government and Fiscal Policy

The Money Supply and the Federal Reserve System

Money Demand and the Equilibrium Interest Rate

The Determination of Aggregate Output, the Price Level, and the Interest Rate

The Labor Market in the Macroeconomy

Financial Crises, stabilization, and Deficits

Household and Firm Behavior in the Macroeconomy: a Further Look

Long-Run Growth

Alternative Views in Macroeconomics

International Trade,comparative Advantage,and Protectionism

Open-Economy Macroeconomics: the Balance of Payments and Exchange Rates

Economic Growth in Developing and Transitional Economies

Filters