Question :
111) Fiscal policy involves the government’s use of ________ to : 1384390
111) Fiscal policy involves the government’s use of ________ to affect economic outcomes.
A) exchange rate changes
B) interest rate changes
C) price level changes
D) private investment expenditures
E) expenditures and taxation
112) Refer to Figure 22-4. Diagram 1 illustrates an economy that is experiencing a(n) ________ gap. The goal of stabilization policy would be to ________ national income until it is equal to ________.
A) recessionary; increase; actual national income
B) inflationary; reduce; potential GDP
C) inflationary; reduce; actual national income
D) inflationary; increase; potential GDP
E) recessionary; increase; potential GDP
113) Refer to Figure 22-4. Diagram 2 illustrates an economy that is experiencing a(n) ________ gap. The goal of stabilization policy would be to ________ national income until it is equal to ________.
A) recessionary; increase; actual national income
B) inflationary; reduce; potential GDP
C) inflationary; reduce; actual national income
D) inflationary; increase; potential GDP
E) recessionary; increase; potential GDP
114) Refer to Figure 22-4, Diagram 1. Which of the following fiscal policy measures could the government implement to return national income to the full-employment level of GDP (potential output, Y*)?
A) reduce government spending
B) increase transfer payments
C) reduce taxes
D) increase government spending
E) increase disposable income
115) Refer to Figure 22-4, Diagram 2. Which of the following fiscal policy measures could the government implement to return national income to the full-employment level of GDP (potential output, Y*)?
A) reduce government spending
B) reduce transfer payments
C) increase taxes
D) increase government spending
E) decrease disposable income
116) If the price level is taken as given in a simple macro model with demand-determined output, it is implicitly being assumed that
A) net exports are positive.
B) net exports are negative.
C) the marginal propensity to consume out of disposable income is equal to the marginal propensity to spend out of national income.
D) all resources in the economy are fully employed.
E) producers can provide whatever output is demanded of them without requiring higher prices to offset any higher costs.
117) Consider a macro model in which output is assumed to be demand-determined. One situation which may justify this assumption is when
A) net exports are positive.
B) net exports are negative.
C) the marginal propensity to consume out of disposable income is equal to the marginal propensity to spend out of national income.
D) all resources in the economy are fully employed.
E) the economy is operating with some unemployed resources.
118) We would expect real national income to be “demand determined” when
1) there is large-scale unemployment of resources in the economy;
2) firms are price setters;
3) firms have excess capacity.
A) 1, 2, and 3
B) 1 and 2
C) 2 and 3
D) 1 only
E) 3 only
119) The simple macro model that is considered in Chapters 21 and 22 of the textbook is characterized by
A) a given (constant) price level, and equilibrium national income determined by demand and supply.
B) an endogenous price level, and national income that is solely demand determined.
C) a given (constant) price level, and national income that is solely demand determined.
D) an endogenous price level, and equilibrium national income determined by demand and supply.
E) an open economy with an endogenous exchange rate.
120) In the simple macro model that is considered in Chapters 21 and 22 of the textbook,
A) the economy is always in equilibrium.
B) there is no government or foreign trade.
C) the price level is determined within the model.
D) there are no supply-side influences on national income.
E) the simple multiplier is always equal to 1.
