Question : 13.2   Monetary Policy Effects 1) An intended goal of expansionary fiscal : 1381477

 

13.2   Monetary Policy Effects

 

1) An intended goal of expansionary fiscal policy and an easing of monetary policy is

A) an increase in interest rates.

B) an increase in the price level.

C) the equalization of the distribution of income.

D) an increase in the level of aggregate output.

 

2) If an increase in the Z factors resulted in a very large change in the price level and a very small change in aggregate output

A) then in the U.S. economy investment demand must not be sensitive to the interest rate.

B) then the U.S. economy must have been on the very steep part of its short-run aggregate supply curve.

C) then the U.S. economy must have been on the very flat part of its short-run aggregate supply curve.

D) then the U.S. aggregate demand curve must be very steep.

 

3) A decrease in the Z factors represents

A) a tightening of monetary policy.

B) an easing of monetary policy.

C) an expansionary fiscal policy.

D) a contractionary fiscal policy.

4) Other things equal, an increase in the Z factors will ________ the equilibrium price level and ________ equilibrium output.

A) increase; increase

B) increase; decrease

C) decrease; increase

D) decrease; decrease

 

5) If the Fed has a strong preference for stable prices relative to output, it responds to a price ________ with a ________ decrease in the interest rate.

A) increase; large

B) increase; small

C) decrease; large

D) decrease; small

 

6) When the ________, the Fed is willing to accept large changes in output to keep the price level stable.

A) AD curve is relatively flat

B) AD curve is relatively steep

C) AS curve is relatively flat

D) AS curve is relatively steep

 

7) If the Fed has a strong preference for stable output relative to prices, the ________ curve is relatively ________.

A) AD; steep

B) AD; flat

C) AS; steep

D) AS; flat

8) In a binding situation,

A) only changes in the price level change the interest rate.

B) only changes in the Z factors change the interest rate.

C) changes in neither the price level nor in the Z factors change the interest rate.

D) the interest rate is always negative.

 

9) In a binding situation, the Fed rule calls for

A) a negative interest rate.

B) a positive interest rate.

C) a negative price level.

D) a negative output level.

 

10) In a binding situation,

A) planned investment decreases when the price level increases.

B) output decreases when the price level increases.

C) planned investment and output both decrease when the price level increases.

D) neither planned investment nor output change when the price level decreases.

 

 

11) In a binding situation, a decrease in the Z factors

A) shifts the AD curve to the right.

B) shifts the AD curve to the left.

C) does not shift the AD curve.

D) causes the AD curve to become horizontal.

12) In a binding situation, a decrease in government spending

A) shifts the AD curve to the right.

B) shifts the AD curve to the left.

C) does not shift the AD curve.

D) causes the AD curve to become horizontal.

 

13) In a binding situation, a decrease in net taxes

A) shifts the AD curve to the right.

B) shifts the AD curve to the left.

C) does not shift the AD curve.

D) causes the AD curve to become horizontal.

 

14) In a binding situation, there is ________ crowding out of planned investment when net taxes decrease.

A) complete

B) partial

C) no

D) negative

 

15) When the AD curve is relatively flat,

A) only fiscal policy can be used to increase output.

B) only monetary policy can be used to increase output.

C) both fiscal policy and monetary policy can be used to increase output.

D) neither fiscal policy nor monetary policy can be used to increase output.