Question 1

An decrease in taxes combined with a decrease in government purchases would:

Accepted Answer

A) ​increase AD. 
B) ​decrease AD. 
C) ​leave AD unchanged. 
D) ​have an indeterminate effect on AD. 
A) ​increase AD. 
B) ​decrease AD. 
C) ​leave AD unchanged. 
D) ​have an indeterminate effect on AD.

Question 2

In the open market economy, contractionary fiscal policy would ______the demand for money and interest rates would_______ and the dollar________ and net exports_______.

Accepted Answer

A) ​increase; rise; appreciates; decrease. 
B) ​increase; fall; depreciates; decrease. 
C) ​decrease; fall; depreciates; increase. 
D) ​decrease; fall; appreciates; increase. 
A) ​increase; rise; appreciates; decrease. 
B) ​increase; fall; depreciates; decrease. 
C) ​decrease; fall; depreciates; increase. 
D) ​decrease; fall; appreciates; increase.

Question 3

Among the following MPC values, which one would have the highest multiplier effect?

Accepted Answer

A) ​1/3 
B) ​2/3 
C) ​3/4 
D) ​2/5 
A) ​1/3 
B) ​2/3 
C) ​3/4 
D) ​2/5

Question 4

Based on the situation depicted in the graph below, which of the following would be an appropriate fiscal policy response?

Accepted Answer

A) ​increase taxes 
B) ​decrease taxes 
C) ​decrease government purchases 
D) ​all of the above 
A) ​increase taxes 
B) ​decrease taxes 
C) ​decrease government purchases 
D) ​all of the above

Question 5

In order for the economy pictured to get back to RGDPNR, the government could use:

Accepted Answer

A) ​decreased taxes and increased government purchases. 
B) ​increased taxes and increased government purchases. 
C) ​decreased taxes and decreased government purchases. 
D) ​increased taxes and decreased government purchases. 
A) ​decreased taxes and increased government purchases. 
B) ​increased taxes and increased government purchases. 
C) ​decreased taxes and decreased government purchases. 
D) ​increased taxes and decreased government purchases.

Question 6

Robert lost his job during the last recession and his yearly income fell by 15 percent. As a result of the action of automatic stabilizers, his disposable income would likely have fallen by less than 15 percent.

Accepted Answer

A) True 
 B)False

Question 7

What are automatic stabilizers and how do they affect the economy? Which is the most important?

Accepted Answer

Automatic stabilizers are changes in gov

Question 8

A substantial increase in marginal tax rates will most likely encourage individuals to choose:

Accepted Answer

A) ​to work more overtime. 
B) ​to invest more. 
C) ​to spend more of their scarce resources looking for tax shelters. 
D) ​none of the above. 
A) ​to work more overtime. 
B) ​to invest more. 
C) ​to spend more of their scarce resources looking for tax shelters. 
D) ​none of the above.

Question 9

If investment decreases by $20 billion and the MPC = 0.8, the resulting decrease in the consumption component of AD is:

Accepted Answer

A) ​$16 billion. 
B) ​$4 billion. 
C) ​$100 billion. 
D) ​$80 billion. 
A) ​$16 billion. 
B) ​$4 billion. 
C) ​$100 billion. 
D) ​$80 billion.

Question 10

Which of the following is true?

Accepted Answer

A) ​The tax multiplier is smaller than the government spending multiplier. 
B) ​The government cannot stimulate consumer spending through tax cuts. 
C) ​The government spending multiplier is smaller than the tax multiplier. 
D) ​The government can stimulate consumer spending through decreases in transfer payments. 
A) ​The tax multiplier is smaller than the government spending multiplier. 
B) ​The government cannot stimulate consumer spending through tax cuts. 
C) ​The government spending multiplier is smaller than the tax multiplier. 
D) ​The government can stimulate consumer spending through decreases in transfer payments.

Question 11

An increase in government purchases or a decrease in taxes, other things being equal, will tend to:

Accepted Answer

A) ​increase interest rates and decrease investment. 
B) ​increase interest rates and increase investment. 
C) ​decrease interest rates and decrease investment. 
D) ​decrease interest rates and increase investment. 
A) ​increase interest rates and decrease investment. 
B) ​increase interest rates and increase investment. 
C) ​decrease interest rates and decrease investment. 
D) ​decrease interest rates and increase investment.

An decrease in taxes combined with a decrease in government purchases would:

In the open market economy, contractionary fiscal policy would __the demand for money and interest rates would_ and the dollar and net exports_.

Among the following MPC values, which one would have the highest multiplier effect?

Based on the situation depicted in the graph below, which of the following would be an appropriate fiscal policy response?

In order for the economy pictured to get back to RGDP_NR, the government could use:

Robert lost his job during the last recession and his yearly income fell by 15 percent. As a result of the action of automatic stabilizers, his disposable income would likely have fallen by less than 15 percent.

What are automatic stabilizers and how do they affect the economy? Which is the most important?

A substantial increase in marginal tax rates will most likely encourage individuals to choose:

If investment decreases by $20 billion and the MPC = 0.8, the resulting decrease in the consumption component of AD is:

Which of the following is true?

An increase in government purchases or a decrease in taxes, other things being equal, will tend to:

The Role and Method of Economics

Eight Powerful Ideas

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Market in Motion and Price Controls

Elasticities

Market Efficiency and Welfare

Market Failure

Public Finance and Public Choice

Consumer Choice Theory

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

Income, Poverty and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

Filters

Exam 16: The Markets for Labor, Capital, and Land

An decrease in taxes combined with a decrease in government purchases would:

In the open market economy, contractionary fiscal policy would ______the demand for money and interest rates would_______ and the dollar________ and net exports_______.

Among the following MPC values, which one would have the highest multiplier effect?

Based on the situation depicted in the graph below, which of the following would be an appropriate fiscal policy response?

In order for the economy pictured to get back to RGDPNR, the government could use:

Robert lost his job during the last recession and his yearly income fell by 15 percent. As a result of the action of automatic stabilizers, his disposable income would likely have fallen by less than 15 percent.

What are automatic stabilizers and how do they affect the economy? Which is the most important?

A substantial increase in marginal tax rates will most likely encourage individuals to choose:

If investment decreases by $20 billion and the MPC = 0.8, the resulting decrease in the consumption component of AD is:

Which of the following is true?

An increase in government purchases or a decrease in taxes, other things being equal, will tend to:

The Role and Method of Economics

Eight Powerful Ideas

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Market in Motion and Price Controls

Elasticities

Market Efficiency and Welfare

Market Failure

Public Finance and Public Choice

Consumer Choice Theory

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

Income, Poverty and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

Filters

In the open market economy, contractionary fiscal policy would __the demand for money and interest rates would_ and the dollar and net exports_.

In order for the economy pictured to get back to RGDP_NR, the government could use: