Question :
61.Whichofthefollowingreducestheinterestrate?
a.anincreaseingovernmentexpendituresandanincreaseinthemoneysupply
b.anincreaseingovernmentexpendituresandadecreaseinthemoneysupply
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61.Whichofthefollowingreducestheinterestrate?
a.anincreaseingovernmentexpendituresandanincreaseinthemoneysupply
b.anincreaseingovernmentexpendituresandadecreaseinthemoneysupply
c.adecreaseingovernmentexpendituresandanincreaseinthemoneysupply
d.adecreaseingovernmentexpendituresandadecreaseinthemoneysupply
62.Supposeinvestmentspendingfalls.TooffsetthechangeinoutputtheFederalReservecould
a.increasethemoneysupply.Thisincreasewouldalsomovethepricelevelclosertoitsvaluebeforethedeclineininvestmentspending.
b.increasethemoneysupply.However,thisincreasewouldmovethepricelevelfartherfromitsvaluebeforethedeclineininvestmentspending.
c.decreasethemoneysupply.Thisdecreasewouldalsomovethepricelevelclosertoitsvaluebeforethedeclineininvestmentspending.
d.decreasethemoneysupply.However,thisincreasewouldmovethepricelevelfartherfromitsvaluebeforethedeclineininvestmentspending.
63.Supposestockpricesrise.TooffsettheresultingchangeinoutputtheFederalReservecould
a.increasethemoneysupply.Thisincreasewouldalsomovethepricelevelclosertoitsvaluebeforetheriseinstockprices.
b.increasethemoneysupply.However,thisincreasewouldmovethepricelevelfartherfromitsvaluebeforetheriseinstockprices.
c.decreasethemoneysupply.Thisdecreasewouldalsomovethepricelevelclosertoitsvaluebeforetheriseinstockprices.
d.decreasethemoneysupply.However,thisdecreasewouldmovethepricelevelfartherfromitsvaluebeforetheriseinstockprices.
64.SupposeforeignersfindU.S.goodsandservicesmoredesirableforsomereasonotherthanachangeintheexchangerate.Whichpoliciescouldbeusedtooffsettheresultingchangeinoutput?
a.anincreaseinthemoneysupplyandanincreaseingovernmentpurchases.
b.anincreaseinthemoneysupplyandadecreaseingovernmentpurchases.
c.adecreaseinthemoneysupplyandanincreaseingovernmentpurchases.
d.adecreaseinthemoneysupplyandadecreaseingovernmentpurchases.
65.IfitwerenotfortheautomaticstabilizersintheU.S.economy,
a.theFederalReservewouldhavelessreasonthanithasnowtomonitorstockprices.
b.itwouldbemoredesirablethanitisnowfortheFederalReservetotargetaninterestrate.
c.astrictbalanced-budgetrulewouldbemoredesirablethanitisnow.
d.outputandemploymentwouldprobablybemorevolatilethantheyarenow.
66.AfiscalstimuluswasinitiatedbyPresidentObamainresponsetotheeconomicdownturnof2008-2009.Atthattime,thepresident’seconomistsestimatedthemultipliertobe
a.3.2forgovernmentpurchasesand2.0fortaxcuts.
b.2.4forgovernmentpurchasesand1.4fortaxcuts.
c.1.6forgovernmentpurchasesand1.0fortaxcuts.
d.1.6forgovernmentpurchasesand0.4fortaxcuts.
67.A2009articleinTheEconomistnotedthatsomestudieshaveprovidedevidenceindicatingthatmultipliersare
a.smallerinclosedeconomiesthaninopeneconomies.
b.largerinclosedeconomiesthaninopeneconomies.
c.smallerincapitalisteconomiesthaninsocialisteconomies.
d.largerincapitalisteconomiesthaninsocialisteconomies.
68.A2009articleinTheEconomistnotedthat
a.recentresearchhasallowedeconomiststoestimatethevaluesoffiscalmultiplierswithagreatdealofprecision.
b.researchonmultipliersindicatesthatmultipliersforpermanenttaxcutstendtobesmallerthanmultipliersfortemporarytaxcuts.
c.mostoftheevidenceonmultipliersforgovernmentspendingisbasedonchangesinmilitaryexpenditures.
d.Alloftheabovearecorrect.
69.Accordingtoa2009articleinTheEconomist,themultipliereffectandcrowding-outeffectwouldexactlyoffseteachotherwhentheeconomyis
a.operatingatfullcapacity.
b.inrecession.
c.experiencingzeroinflation.
d.experiencinghighratesofinflation.
Multiple Choice – Section 04: Conclusion
1.Intheshortrun,
a.thepricelevelaloneadjuststobalancethesupplyanddemandformoney.
b.outputrespondstochangesintheaggregatedemandforgoodsandservices.
c.changesinthemoneysupplycauseaproportionalchangeinthepricelevel.
d.increasesinthemoneysupplyshifttheaggregatesupplycurvecausingoutputtorise.
2.In thelong run,the levelof output
a.dependsonthemoneysupply.
b.dependsonthepricelevel.
c.isdeterminedbysupply-sidefactors.
d.Alloftheabovearecorrect.
3.Inthelongrun,changesinthemoneysupplyaffect
a.prices.
b.output.
c.unemploymentrates.
d.Alloftheabove.
4.WhenCongressreducesspendinginordertobalancethegovernment’sbudget,itneedstoconsider
a.boththeshort-runeffectsonaggregatedemandandaggregatesupply,andthelong-runeffectsonsavingandgrowth.
b.onlytheshort-runeffectsonaggregatedemandandaggregatesupply.
c.onlythelong-runeffectsonsavingandgrowth.
d.onlythelong-runeffectsonaggregatedemandandaggregatesupply.