| 1 |
The near term effect of an unexpected sale of bonds by the central bank is.
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A. An increase in interest rates, a risen investment and a rise in GDP
B. An increase in interest rates a drop in investment and a drop in GDP
C. A decrease in interest rtes a rise in investment and a rise in GDP
D. A decrease in interesr rates a drop in investment and a drop in GDP
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| 2 |
When a government prints money to finance its expenditures it is likely to cause
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A. Unemployment
B. Inflation
C. Deflation
D. Reductions in the use of barter
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| 3 |
When the central Bank ________ the money supply the LM curve shifts to the _______ interest rates ____________ and equilibrium aggregate output.
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A. Increase ; right ; fall; increase
B. increases ; left ; rise ; decrease
C. decreases ; left ;rise ; increases
D. decreases ; left ; fall ; increases
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| 4 |
A change in the money supply has a greater effect upon equilibrium income.
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A. The more interest sensitive private sector spending is.
B. The less interest sensitive private sector spending is.
C. The smaller the expenditure multiplier is
D. The more interest sensitive money holdings are to the rate of interest.
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| 5 |
A decrease in autonomous consumer expenditure causes the equilibrium level of aggregate output to __________ at any given interest rate and shifts the ___ curve to the __________
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A. rise ; LM ;right
B. rise ; IS ; right
C. Fall ; LM ; left
D. rise ;IS; Left
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| 6 |
According to the supply side model a reduction in the tax rate.
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A. Could reduce the size of any budget deficit
B. Would have no effect on output
C. Would have no effect on consumption
D. None of the above
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| 7 |
According to the Laffer curve as tax rates increase tax revenues.
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A. Decrease continuously.
B. Initially decrease and then increase
C. Rise continuously
D. Initially increase and then decrease
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| 8 |
You know that all taxes are distortionary under what conditions will this knowledge lead you to appose the imposition of every single tax in the economy.
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A. If you live in a 1st best world.
B. If you live in a 2nd best world
C. If the tax rates on some of the items are prohibitively high
D. Either of the above
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| 9 |
The idea that the money supply should change to accommodate changes in aggregate demand is associated with the ideas of.
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A. Milton Friedman
B. Ronald reagan
C. Margaret Thatcher
D. John Maynard Keynes
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| 10 |
An example of discretionary fiscal policy would be.
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A. The operation of the welfare sate
B. The operation of the processive federal income tax
C. A tax cut adopted to stimulate consumption
D. An interest rate out in plummeted to stimulate consumption
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| 11 |
" A growing number of economists view the Fed's new willingness to take on more of the nation's debt as inflationary in the long run." This inflation worry is because.
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A. The government may tax less
B. The debt may become excessive
C. The government may spend more
D. The money supply may increase excessively
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| 12 |
As the interest sensitivity of money demand increases
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A. The multiplier term increases
B. Fiscal policy has a greater effect on output
C. Monetary policy has a smaller effect on output
D. All of the above
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| 13 |
If Federal reserve conducts open market sales, the money supply ___ shifting the LM curve to the_____
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A. decreases ; right
B. decreases ; left
C. Increases ; right
D. Increase ; left
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| 14 |
The quantity of money demanded increases with income Thus if income increases the opportunity cost of holding money demand and re establish equilibrium in the money market This relation is captured by.
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A. An upward stopping LM curve
B. A downward sloping L curve
C. A downward sloping IS curve
D. The circular flow of money in the economy.
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| 15 |
The purpose of fiscal policy is to
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A. Alter the direction of the economy
B. Change people's attitudes toward governemnt
C. Educate people as to the importance of economics
D. Offer insight into the way thing work
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| 16 |
Automatic stabilizers
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A. Counter balance fluctuations in economic activity.
B. Reinforce fluctuations in economic activity
C. Do not occur when the economy falls into recession
D. Reduces the size of the deflationary gap
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| 17 |
In the Keynesian corss diagram, and cline in autonomous consumer expenditure causes the aggregate demand function to shift _____ the equilibrium level of aggregate output to fall, and the IS curve to shift to the.
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A. up ; left
B. up ; right
C. down ; left
D. down ; right
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| 18 |
An example of nondiscretionary fiscal policy would be.
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A. The operation of the welfare state
B. A Federal jobs program adopted to stimulate consumption
C. A tax cut adopted to stimulate consumption
D. An interest rate cut implemented to stimulate consumption
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| 19 |
Money's primary role in the economy comes from the benefits of lowering transactions costs and allowing specialization This function of money is called.
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A. Store of value
B. Medium of exchange
C. Standard of deferred payment
D. Unit of account
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| 20 |
An increase in autonomous consumer expenditure causes the equilibrium levelof aggregate output to _______ at any given interest rate and shifts the ____ curve to the
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A. rise ; LM ;right
B. rise ; IS ; right
C. fall ; LM, Left
D. rise ; IS ; Left
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