Question 1

Suppose there is an increase in government spending.To stabilize output,the Federal Reserve would

Accepted Answer

A)  increase government spending.
B)  increase the money supply.
C)  decrease government spending.
D)  decrease the money supply.

Question 2

Some economists argue that

Accepted Answer

A)  monetary policy should actively be used to stabilize the economy.
B)  fiscal policy should actively be used to stabilize the economy.
C)  fiscal policy can be used to shift the AD curve.
D)  All of the above are correct.

Question 3

A​ccording to the IGM poll,what percentage of economists polled agreed that the benefits of ARRA exceeded the costs?

Accepted Answer

A)  ​75%
B)  ​19%
C)  ​6%
D)  ​97%

Question 4

Automatic stabilizers

Accepted Answer

A)  increase the problems that lags cause in using fiscal policy as a stabilization tool.
B)  are changes in taxes or government spending that increase aggregate demand without requiring policy makers to act when the economy goes into recession.
C)  are changes in taxes or government spending that policy makers quickly agree to when the economy goes into recession.
D)  All of the above are correct.

Question 5

During periods of expansion,automatic stabilizers cause government expenditures

Accepted Answer

A)  and taxes to fall.
B)  and taxes to rise.
C)  to rise and taxes to fall.
D)  to fall and taxes to rise.

Question 6

Critics of stabilization policy argue that

Accepted Answer

A)  there is a lag between the time policy is passed and the time policy has an impact on the economy.
B)  the impact of policy may last longer than the problem it was designed to offset.
C)  policy can be a source of,instead of a cure for,economic fluctuations.
D)  All of the above are correct.

Question 7

For the following questions,use the diagram below:
Figure 34-7. 1 to AD2 as a result of A) an increase in government purchases. B) a decrease in net exports. C) households saving a smaller fraction of their income. D) a decrease in the price level." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 34-7.The aggregate-demand curve could shift from AD1 to AD2 as a result of

Accepted Answer

A)  an increase in government purchases.
B)  a decrease in net exports.
C)  households saving a smaller fraction of their income.
D)  a decrease in the price level.

Question 8

One of President Obama's first fiscal policy initiatives was​

Accepted Answer

A)  ​ARRA.
B)  ​TARP.
C)  ​QE1.
D)  ​QE2.

Question 9

Critics of stabilization policy argue that

Accepted Answer

A)  policy affects aggregate demand quickly,but the effects on aggregate demand are long-lived.
B)  policy affects aggregate demand with a lag,and the effects on aggregate demand are long-lived.
C)  policy affects aggregate demand with a lag,but the effects are short-lived.
D)  policy does not affect aggregate demand.

Question 10

According to a 2009 article in The Economist,the multiplier effect and crowding-out effect would exactly offset each other when the economy is

Accepted Answer

A)  operating at full capacity.
B)  in recession.
C)  experiencing zero inflation.
D)  experiencing high rates of inflation.

Question 11

Suppose investment spending falls.To offset the change in output the Federal Reserve could

Accepted Answer

A)  increase the money supply.This increase would also move the price level closer to its value before the decline in investment spending.
B)  increase the money supply.However,this increase would move the price level farther from its value before the decline in investment spending.
C)  decrease the money supply.This decrease would also move the price level closer to its value before the decline in investment spending.
D)  decrease the money supply.However,this increase would move the price level farther from its value before the decline in investment spending.

Question 12

Other things the same,during recessions taxes tend to

Accepted Answer

A)  rise.The rise in taxes stimulates aggregate demand.
B)  rise.The rise in taxes contracts aggregate demand.
C)  fall.The fall in taxes stimulates aggregate demand.
D)  fall.The fall in taxes contracts aggregate demand.

Question 13

For the following questions,use the diagram below:
Figure 34-7. 1 to AD2,the economy will stay at point b in both the short run and long run. C) It is possible that either fiscal or monetary policy might have caused the shift from AD1 to AD2. D) All of the above are correct." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 34-7.Which of the following is correct?

Accepted Answer

A)  A wave of optimism could move the economy from point a to point b.
B)  If aggregate demand moves from AD1 to AD2,the economy will stay at point b in both the short run and long run.
C)  It is possible that either fiscal or monetary policy might have caused the shift from AD1 to AD2.
D)  All of the above are correct.

Exam 21: The Influences of Monetary and Fiscal Policy on Aggregate Demand: Using Policy to Stabilize the Economy

Suppose there is an increase in government spending.To stabilize output,the Federal Reserve would

Correct Answer
verified

Some economists argue that

Correct Answer
verified

Critics of stabilization policy argue that

Correct Answer
verified

Other things the same,during recessions taxes tend to

Correct Answer
verified

According to a 2009 article in The Economist,the multiplier effect and crowding-out effect would exactly offset each other when the economy is

Correct Answer
verified

During periods of expansion,automatic stabilizers cause government expenditures

Correct Answer
verified

Automatic stabilizers

Correct Answer
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Suppose investment spending falls.To offset the change in output the Federal Reserve could

Correct Answer
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For the following questions,use the diagram below: Figure 34-7. -Refer to Figure 34-7.Which of the following is correct?

Correct Answer
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Correct Answer
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Critics of stabilization policy argue that

Correct Answer
verified

One of President Obama's first fiscal policy initiatives was

Correct Answer
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According to the IGM poll,what percentage of economists polled agreed that the benefits of ARRA exceeded the costs?

Correct Answer
verified

Exam 21: The Influences of Monetary and Fiscal Policy on Aggregate Demand: Using Policy to Stabilize the Economy

Suppose there is an increase in government spending.To stabilize output,the Federal Reserve would

Correct AnswerverifiedShow Answer

Some economists argue that

Correct AnswerverifiedShow Answer

Critics of stabilization policy argue that

Correct AnswerverifiedShow Answer

Other things the same,during recessions taxes tend to

Correct AnswerverifiedShow Answer

According to a 2009 article in The Economist,the multiplier effect and crowding-out effect would exactly offset each other when the economy is

Correct AnswerverifiedShow Answer

During periods of expansion,automatic stabilizers cause government expenditures

Correct AnswerverifiedShow Answer

Automatic stabilizers

Correct AnswerverifiedShow Answer

Suppose investment spending falls.To offset the change in output the Federal Reserve could

Correct AnswerverifiedShow Answer

For the following questions,use the diagram below: Figure 34-7. -Refer to Figure 34-7.Which of the following is correct?

Correct AnswerverifiedShow Answer

For the following questions,use the diagram below: Figure 34-7. -Refer to Figure 34-7.The aggregate-demand curve could shift from AD1 to AD2 as a result of

Correct AnswerverifiedShow Answer

Critics of stabilization policy argue that

Correct AnswerverifiedShow Answer

One of President Obama's first fiscal policy initiatives was​

Correct AnswerverifiedShow Answer

A​ccording to the IGM poll,what percentage of economists polled agreed that the benefits of ARRA exceeded the costs?

Correct AnswerverifiedShow Answer

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One of President Obama's first fiscal policy initiatives was

Correct Answer
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According to the IGM poll,what percentage of economists polled agreed that the benefits of ARRA exceeded the costs?

Correct Answer
verified