Question 1

Expansionary fiscal policy is likely to lead a nation's currency to depreciate.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is TRUE?

Accepted Answer

A) Points along the aggregate supply curve show the equilibrium levels of output and prices that are consistent on the demand side of the economy. 
B) Points along the aggregate demand curve show the equilibrium levels of output and prices that are consistent on the supply side of the economy. 
C) Aggregate demand shows the levels of GDP and prices where expenditure decisions and production decisions match. 
D) Aggregate supply shows the levels of GDP and prices where expenditure decisions and production decisions match.

Question 3

An example of expansionary fiscal policy would be

Accepted Answer

A) a decrease in government spending to reduce budget deficits. 
B) an increase in tax collection to reduce budget deficits. 
C) a decrease in interest rates to help stimulate the economy. 
D) an increase in government spending on infrastructure to create jobs and improve the economy. 
E) an increase in interest rates to encourage private savings.

Question 4

Intermediate inputs are

Accepted Answer

A) goods used for household consumption only. 
B) goods used for government consumption only. 
C) goods purchased by one business from another to use in production. 
D) goods purchased by foreigners. 
E) raw materials used in the production process.

Question 5

If a currency rapidly depreciates,what are the possible negative results to the economy of using contractionary monetary policy to address the depreciation?

Accepted Answer

The answer of If a currency rapidly depreciates,what are the...

Question 6

Expansionary monetary policy is likely to lead to a depreciation of the nation's currency.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following would NOT be a reason why developed nations would try to coordinate their macroeconomic policies?

Accepted Answer

A) To achieve a desirable level of world economic growth 
B) To avoid imposing a disproportionate burden on one major country in its attempt to help other world economies 
C) To stimulate production in other countries using the higher incomes generated by policy coordination 
D) To coordinate retaliatory policies on developing countries' trade barriers 
E) None of the above.That is,A,B,C,and D are all correct.

Question 8

Starting from a balanced budget,which of the following would NOT cause a deficit?

Accepted Answer

A) A decrease in taxes 
B) An increase in spending of goods and services 
C) An increase in transfer payments 
D) A 50 percent increase in spending accompanied by a 40 percent increase in taxes 
E) None of the above.

Question 9

If consumption spending increases because people feel more confident about the future,

Accepted Answer

A) aggregate demand will shift to the left. 
B) aggregate demand will shift to the right. 
C) aggregate supply will shift to the left. 
D) aggregate supply will shift to the right.

Question 10

If a component of aggregate demand increases,

Accepted Answer

A) GDP in the United States is likely to increase less than that component of spending increased. 
B) GDP in the United States is likely to increase more than that component of spending increased. 
C) GDP in the United States is likely to decrease. 
D) GDP in the United States will not change.

Question 11

Changes in aggregate demand

Accepted Answer

A) could be caused by changes in the spending decisions of the households,businesses,the government,and foreigners. 
B) are very uncommon. 
C) are unlikely to change quickly in response to economic events. 
D) are primarily based on changes in firms' abilities to produce products. 
E) are not affected by changes in government policies.

Question 12

A common response to stop a depreciation of a currency is to use contractionary monetary policy,which could lead to a recession.

Accepted Answer

A) True 
 B)False

Question 13

Along the aggregate supply curve

Accepted Answer

A) the horizontal part represents a situation where the economy is operating above full employment levels. 
B) inflation would be a primary concern along the horizontal part of the aggregate supply curve. 
C) idle resources,such as labor and capital,would be a feature of the vertical section of the aggregate supply curve. 
D) the horizontal section of the aggregate supply curve represents the limit of production. 
E) the middle,upward-sloping part of the aggregate supply curve would be associated with a growing economy that experienced increased prices from resources that are becoming relatively scarce.

Question 14

Which of the following is NOT one of the factors your text identifies that could affect the size of the multiplier?

Accepted Answer

A) What sector of the economy receives the initial increase in spending 
B) How the spending is financed 
C) Whether the economy is in recession or at full employment 
D) Whether the economy is in autarky equilibrium

Question 15

When spending and incomes in an economy increase,

Accepted Answer

A) imports are likely to increase. 
B) imports are likely to be unchanged. 
C) imports are likely to decrease. 
D) exports are likely to decrease.

Question 16

The recent trend internationally has been for the executive and legislative branches of elected governments to get more control over monetary policy,as has been the case in countries such as the United States.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is FALSE concerning the long run?

Accepted Answer

A) Economists believe that fiscal and monetary policies have no permanent effects on the economy. 
B) Economists more or less agree that the economy tends to fluctuate around the level that is consistent with full employment. 
C) In the long run,the unemployment rate returns to its normal level. 
D) The current account must tend toward balance in the long run. 
E) None of the above.

Question 18

It is more certain how expansionary monetary policy will affect the current account than how expansionary fiscal policy will affect it.

Accepted Answer

A) True 
 B)False

Question 19

Expansionary monetary policy involves an increase in the money supply and a fall in interest rates,leading to a positive expansion in income.

Accepted Answer

A) True 
 B)False

Question 20

Fiscal policy is

Accepted Answer

A) the selling of government bonds by the Treasury. 
B) the deliberate manipulation of the money supply designed to affect the interest rate. 
C) the deliberate manipulation of taxation and spending designed to affect the economy. 
D) the selling of foreign exchange reserves designed to change the exchange rate. 
E) All of the above.

Exam 11: An Introduction to Open Economy Macroeconomics

Expansionary fiscal policy is likely to lead a nation's currency to depreciate.

Which of the following is TRUE?

An example of expansionary fiscal policy would be

Intermediate inputs are

If a currency rapidly depreciates,what are the possible negative results to the economy of using contractionary monetary policy to address the depreciation?

Expansionary monetary policy is likely to lead to a depreciation of the nation's currency.

Which of the following would NOT be a reason why developed nations would try to coordinate their macroeconomic policies?

Starting from a balanced budget,which of the following would NOT cause a deficit?

If consumption spending increases because people feel more confident about the future,

If a component of aggregate demand increases,

Changes in aggregate demand

A common response to stop a depreciation of a currency is to use contractionary monetary policy,which could lead to a recession.

Along the aggregate supply curve

Which of the following is NOT one of the factors your text identifies that could affect the size of the multiplier?

When spending and incomes in an economy increase,

The recent trend internationally has been for the executive and legislative branches of elected governments to get more control over monetary policy,as has been the case in countries such as the United States.

Which of the following is FALSE concerning the long run?

It is more certain how expansionary monetary policy will affect the current account than how expansionary fiscal policy will affect it.

Expansionary monetary policy involves an increase in the money supply and a fall in interest rates,leading to a positive expansion in income.

Fiscal policy is