Question # 1

An example of discretionary fiscal policy would be.

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The operation of the welfare sate

The operation of the processive federal income tax

A tax cut adopted to stimulate consumption

An interest rate out in plummeted to stimulate consumption

A decrease in fully autonomous investment other things equal shifts the ______ curve to the

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IS ; right

IS ; Left

LM ; Left

LM ; right

" 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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The government may tax less

The debt may become excessive

The government may spend more

The money supply may increase excessively

The implementation lag for monetary policy is generally

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Much longer than it is for fiscal policy

Unrelated to central bank action

The same as it is for fiscal policy

Much shorter than it is for fiscal policy.

The main role of the Federal Reserve is to

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Administer the government on the state of the economy

Overses the operations of the financial system and monetary management.

Establish the value of the dollar and official interest rates

Provide advice to the government on the state of the economy.

Aggregate output and the interest rate are ______ related to government spending and are ___ related to taxes.

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Positively ; positively

Positively ; negatively

negatively ; positively

negatively ; negatively

An increase in expected inflation is likely ot cause.

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A decline in the demand for real balances

an increase in the demand for real balances.

No change i the demand for real balances

No change in the demand for real balances only of the income elasticity of real money demand is zero.

An increase in government spending causes the equilibrium level of aggregate output to_______ at any given interest rate and shifts the ____ curve to the

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rise ; LM ; right

rise ; LM ;Left

fall ; IS ; Left

rise ; IS ;right

The market price of bonds can fluctuate depending on

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How many bonds were sold

Who bought the bonds

The amount of the coupon

The interest rate

The opportunity cost of holding currency decrease when

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Income decreases

The interest rate on bonds decreases

The interest rate on money decrease wealth decrease

Wealth decreases

Monetary policy can affect output.

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this statement is always true

This statements always false

This statement is true only in the short run

This statement is true only in the medium run and the long run

Keynes suggested that ________ income households consume a ____ proportion of their income than ____ income households.

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Low ; smaller ; high

Low ; larger ; high

low ; smaller ; middle

High ; larger ; low

What is the significance of underestimating transactions money.

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Monetary policy will be over simulating the economy

Monetary policy will be putting a drag on the economy

there is a need for money that the central bank should be meating.

The economy has too much money and there frore not enough spending.

In the Keynesian cross diagram an increasing investment spending because companies become more optimistic about investment profitability causes the aggregate demand function to shift ______ and the equilibrium level of aggregate output to rise and the IS curve to shift to the

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up ; right

up ; left

down ;left

down ; right

Which of the following part of M1

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Stock negotiating accounts

Automatic transfer system accounts

Negotiable orders of withdrawal accounts

Demand deposits of mutual saving banks.

The government performs its redistribution function mainly through.

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Trade practice legislation against anticipative behavior

The provision of public goods

Taxes and transfer payments

Tariffs on imports

The largest source of tax revenue for the federal government is.

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The personal income tax

The social security tax

The property tax

The sales tax

What technical terminology do economists use to refer to how much the money will multiply as this process unfolds.

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The multiplier

The money multiplier

Required reserve ratio

Open market operations

Large difference is inflation rates among countries are almost always the result of large difference in.

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Productivity

Real income growth

The growth rates of real money demand

The growth rates of nominal money supplies

When there is no change in central banking holding of international reserve balances a country's

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Trae balance always equals 0

Current account balance always equals 0

Capital account balance always equals 0

Balance of payments always equal 0

A major advantage of monetary over fiscal policy is that monetary policty.

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Can be put into effect more quickly

Affects all sectors of the economy equally

Authorities are quicker to see the need for policy

Has a more direct and predictable impact on spending.

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