Macro Final Review

If taxes and government expenses did not vary with income, then income would be more stable. not change. be less stable. be closer to potential income.

be less stable.

A decrease in consumer spending can be expected to shift the aggregate expenditures curve A. downward and the aggregate demand curve leftward. B. upward and the aggregate demand curve leftward. C. downward and the aggregate demand curve rightward. D. upward and the aggregate demand curve rightward.

downward and the aggregate demand curve leftward

If Congress passes legislation to increase government purchases to counter the effects of a recession, then this would be an example of a(n)

expansionary fiscal policy.

Which of the following is an example of built-in stability? As real GDP decreases, income tax revenues increase and transfer payments decrease. income tax revenues decrease and transfer payments increase. income tax revenues and transfer payments both decrease. income tax revenues and transfer payments both increase.

income tax revenues decrease and transfer payments increase.

A decrease in the price of crude oil would most likely A. decrease aggregate supply in the U.S. B. increase aggregate supply in the U.S. C. increase aggregate demand in the U.S. D. decrease aggregate demand in the U.S.

increase aggregate supply in the U.S.

If the national incomes of our trading partners increase, then our aggregate demand A. decreases because consumption decreases. B. increases because consumption increases. C. decreases because net exports decrease. D. increases because net exports increase.

increases because net exports increase.

If the government wishes to increase the level of real GDP, it might reduce

taxes

Which of the following serves as an automatic stabilizer in the economy? interest rates exchange rates the inflation rate the progressive income tax

the progressive income tax