Econ
Which of the following policies might create demand-pull inflation?
A cut in taxes
An increase in input prices will cause
AD to decrease (move to the left).
An increase in government spending will cause
AD to increase (move to the right)
A decrease in interest rates will cause
AD to increase (move to the right).
Other things equal, a strong dollar will shift
AD to the left (cause it to decrease).
Other things equal, an Increase in Confident will shift
AD to the right (cause it to increase).
Other things equal, an improvement in productivity will shift
AS to the right (cause it to increase).
If the Federal Reserve wished to engage in contractionary monetary policy, it could
All of these.
Which of the following policies might create demand-pull inflation?
An increase government spending
Cost-push inflation is caused by which of the following, other things equal?
An increase in input costs.
.Which of the following would qualify as an aggregate supply shock?
An unexpected increase in oil prices
the critical elements of nondiscretionary fiscal policy are
a progressive income tax and a welfare state.
The interest rate effect, the real balance effect, and the foreign purchases effect suggest that the
aggregate demand curve is
Contractionary monetary policy would shift the
aggregate demand curve to the left.
Expansionary monetary policy would shift the
aggregate demand curve to the right.
Short-run expansionary Fiscal Policy would result in
aggregate demand moving to the right.
Using the aggregate supply-aggregate demand model, the tax cuts of 2001 and 2003 that came in the form of tax rebate checks would cause
aggregate demand to shift to the right
The mistiming problem with discretionary fiscal policy results from
all of the options are correct.
The purpose of fiscal policy is to
alter the direction of the economy.
. All of the following will result in a leftward shift of the aggregate supply curve, except
an improvement in technology.
Other things equal, a tax will shift
b. AD to the left (cause it to decrease).
. The Federal Funds Rate is the rate at which*
banks lend to one another to meet reserve requirements.
Other things equal, an improvement in productivity will shift
c. AS to the right (cause it to increase).
An increase in the target for the federal funds rate would be an example of
contractionary monetary policy.
Between 2004 and 2005 the Federal Reserve raised interest rates 11 times. This is an example of
contractionary monetary policy.
sale of government debt as part of open market operations would be an example of
contractionary monetary policy.
From the early 1980's through 2000 the Federal Reserve's primary focus was on
controlled inflation and stable growth.
Banks
create money because they take deposits and make loans.
Policies focused on lowering interest rates to allow people to buy homes would be considered
demand-side policies.
The portion of the Obama stimulus package that increased spending is best thought of as
discretionary (and expansionary) fiscal policy
The 2003 tax rebate is an example of
discretionary fiscal policy.
A purchase of government debt/Bonds as part of open market operations would be an example of
expansionary monetary policy.
The Federal Reserve has
indirect influence over macroeconomic variables such as unemployment and inflation through the use of intermediate targets.
If interest rates near zero fail to stimulate borrowing, the economy is in a
liquidity trap.
When the transmission mechanism breaks down macroeconomists call this the
liquidity trap.
One typical response to a recession for those engaged in discretionary fiscal policy is to
lower taxes and increase spending.
If the Federal Reserve wished to engage in expansionary monetary policy it could
lower the primary credit rate.
If the Fed wants banks to have more money to lend, it can
lower the reserve ratio.
If the Federal Reserve wished to engage in expansionary monetary policy it could
lower the reserve ratio.
A monetary aggregate is
measure of the quantity of money in the economy
. All of the following will result in a leftward shift of the aggregate demand curve, except
monetary policy that purposefully decreases interest rates.
The Federal Reserve governs U.S.
monetary policy.
The portion of the Obama stimulus package that bolstered state Medicaid plans is best thought of as
nondiscretionary fiscal policy
When domestic prices rise,
people buy more imported goods
When the Federal Reserve loans money to banks, the rate it charges banks with excellent credit
primary credit rate.
In terms of timing, the 2003 tax rebate was
proposed at a time the economy needed a boost.
The amount of money that a bank must keep on reserve at the Federal Reserve the
reserve ratio.
If the Federal Reserve wished to increase interest rates using open market operations it would
sell U.S. government securities.
The "monetary policy transmission mechanism" connects
short-term interest rates to aggregate demand.
Policies focused on putting people to work by reducing the regulatory requirements associated
supply-side policies.
The primary credit rate refers to the rate at which
the Federal Reserve charges banks (with excellent credit) for loans.
An example of nondiscretionary fiscal policy would be
the existence of the progressive federal income tax.
Discretionary Fiscal Policy differs from Nondiscretionary Fiscal Policy in that
the former requires timely decisions, whereas the latter is built into the system.
The reserve ratio is*
the percentage of every dollar deposited in a checking account that a bank must maintain in reserves.
When aggregate demand increases in the Intermediate range of the aggregate supply curve,
the price level increases and the output stays the same.
When aggregate demand increases in the Keynesian range of the aggregate supply curve,
the price level stays the same and the output increases.
When economists say that the economy is at full-employment, they mean that
there is no cyclical unemployment.
If you were to use an aggregate supply and aggregate demand diagram to model nondiscretionary and discretionary fiscal policy in reaction to a positive aggregate demand shock, you would see the aggregate demand curve move
to the left, back toward its pre-shock position as a result of these policies.
If you were to use an aggregate supply and aggregate demand diagram to model nondiscretionary and discretionary fiscal policy in reaction to a negative aggregate demand shock, you would see the aggregate demand curve move
to the right, back toward its pre-shock position as a result of these policies.
disagreements about the shape of the aggregate supply curve focus on the degree of blank in the economy
unemployment
The Classical portion of the aggregate supply curve is
vertical.
When the Federal Reserve wishes to, in the long run, decrease inflation it
will decrease the money supply by selling bonds.
Which of the following would qualify as an aggregate demand shock?
An unexpected reduction in consumer confidence
Fiscal Policy is controlled by
Congress and the President.
Which of the following would be described as the operational lag?
The time required to get a particular plan implemented with the money getting into peoples' hands.
Which of the following would be described as the recognition lag?
The time required to know that there is a recession.
An example of discretionary fiscal policy would be
a tax increase adopted to control inflationary pressures.
A political problem with discretionary fiscal policy is the
expansionary bias.
Fiscal policy is purposeful movements in ____________ designed to direct an economy.
government spending and taxes
Other things equal, a increase in regulation will shift
. AS to the left (cause it to decrease).
The Keynesian portion of the aggregate supply curve is
. horizontal.
.Which of the following would be described as the administrative lag?
. The time required to agree upon a policy remedy for a recession.
Which monetary aggregate is the broadest?
M2.
Demand-pull inflation is caused by which of the following, other things equal?
Monetary policy that purposefully decreases interest rates.
A political leader suggesting that an economic downturn will be cushioned automatically is referring to
Nondiscretionary Fiscal Policy.