.

Refer to the table. Money supply M1 for this economy is

$160.

Assume the MPC is two-thirds. If investment spending increases by $7 billion, the level of GDP will increase by

$21 billion.

Refer to the table. Money supply M1 for this economy is

$220.

In 2021, the U.S. public debt was about

$29.7 trillion.

The public debt for the economy is

$460 billion.

The public debt for the economy is

$660 billion.

In the diagram, the economy's long-run aggregate supply curve is shown by line

1.

Currency (paper money plus coins) constitutes about

10.3 percent of the U.S. M1 money supply.

The accompanying table gives budget information for a hypothetical economy. Assume that all budget surpluses are used to pay down the public debt. If year 1 is the first year of this nation's existence and year 4 is the present year, the public debt as a percentage of GDP in year 4 is

3 percent.

In the diagram, the economy's relevant aggregate demand and long-run aggregate supply curves, are lines

4 and 1, respectively.

The Board of Governors of the Federal Reserve has _________blank members.

7

Which of the diagrams for the U.S. economy best portrays the effects of an increase in government regulations?

B

Refer to the diagrams, in which AD1 and AS1 are the "before" curves and AD2 and AS2 are the "after" curves. Cost-push inflation is depicted by

B.

The central authority of the U.S. banking system is the

Board of Governors of the Federal Reserve.

Refer to the diagrams, in which AD1 and AS1 are the "before" curves and AD2 and AS2 are the "after" curves. A recession is depicted by

A and B

Refer to the graphs. An increase in an economy's labor productivity would shift curve

AB to CD and shift curve X to Y.

Refer to the diagram, in which Qf is the full-employment output. Contractionary fiscal policy would be most appropriate if the economy's present aggregate demand curve were at

AD3.

The public debt is held as

Treasury bills, Treasury notes, Treasury bonds, and U.S. savings bonds.

Refer to the diagrams, in which AD1 and AS1 are the "before" curves and AD2 and AS2 are the "after" curves. Growth, full-employment, and price stability are depicted by

C.

The multiplier effect indicates that

a change in spending will change aggregate income by a larger amount.

With cost-push inflation, there will be

a decrease in real GDP.

An appropriate fiscal policy for a severe recession is

a decrease in tax rates.

In the diagram, a shift from AS1 to AS2 might be caused by

a decrease in the prices of domestic resources.

If you write a check on a bank to purchase a used Honda Civic, you are using money primarily as

a medium of exchange.

Refer to the diagram. The initial aggregate demand curve is AD1, and the initial aggregate supply curve is AS1. In the long run, demand-pull inflation is best shown as

a shift of aggregate demand from AD1 to AD2, followed by a shift of aggregate supply from AS1 to AS2.

Refer to the diagram. The initial aggregate demand curve is AD1, and the initial aggregate supply curve is AS1. Demand-pull inflation in the short run is best shown as

a shift of the aggregate demand curve from AD1 to AD2.

Money functions as

a store of value, a unit of account, and a medium of exchange.

If you are estimating your total expenses for school next semester, you are using money primarily as

a unit of account.

Supply-side economists recommend lower marginal tax rates on investments to encourage saving and investment because they believe

all of these choices are correct.

Which of the following fiscal policy actions is most likely to increase aggregate supply?

an increase in government spending on infrastructure that increases private sector productivity

The interest rate that the Federal Reserve pays banks for money they leave there on deposit overnight is the

IORB.

The curve relating government tax rates and tax revenues and on which a particular tax rate (between zero and 100 percent) maximizes tax revenues is known as the

Laffer Curve.

The given curve is known as the

Laffer Curve.

Money market deposit accounts are included in

M2 only.

Refer to the diagram for a specific economy. The curve on this graph is known as a

Phillips Curve.

Refer to the diagram for a specific economy. Which of the following best describes a decision by policymakers that moves this economy from point b to point a?

Policymakers have instituted an expansionary monetary policy and/or a budgetary deficit, thereby accepting a higher rate of inflation to reduce unemployment.

Which of the following best describes the idea of a political business cycle?

Politicians will use fiscal policy to cause output, real incomes, and employment to be rising prior to elections.

Which one of the following is true about the U.S. Federal Reserve System?

There are 12 Federal Reserve districts each with one central bank.

Currency in circulation is part of

both M1 and M2.

The amount by which federal government expenditures exceed revenues in any year is a

budget deficit.

The natural rate of unemployment

can vary over time and defines the location of the long-run aggregate supply curve.

Supply-side economics believes that lower marginal tax rates would

cause people to work more, increasing the supply of labor, and GDP.

In the United States, the money supply (M1) includes

coins, paper money, checkable deposits, and savings deposits.

The U.S. public debt

consists of the historical accumulation of all past federal deficits and surpluses.

If there is a constitutional requirement to maintain a balanced budget, then during a recession when tax revenues are shrinking, the government will have to implement

contractionary fiscal policy.

Which of the following is the basic economic policy function of the Federal Reserve Banks?

controlling the supply of money

Refer to the diagram and assume that prices and wages are flexible both upward and downward in the economy. In the extended AD-AS model,

cost-push inflation would involve first a leftward shift of curve C, then a rightward shift of curve C.

The sale of government bonds in the open market by the Fed will

decrease aggregate demand.

Cost-push inflation is characterized by a(n)

decrease in aggregate supply and no change in aggregate demand.

If the MPC in an economy is 0.8, government could shift the aggregate demand curve rightward by $100 billion by

decreasing taxes by $25 billion.

Discretionary fiscal policy will stabilize the economy most when

deficits are incurred during recessions and surpluses during inflations.

Fiscal policy refers to

deliberate changes in government spending and taxes to promote economic growth, full employment, and price level stability.

A rightward shift of the AD curve in the very steep upper part of the short-run AS curve will

increase the price level by more than real output.

Suppose the federal government had budget deficits of $40 billion in year 1 and $50 billion in year 2 but had budget surpluses of $20 billion in year 3 and $50 billion in year 4. Also assume that it used its budget surpluses to pay down the public debt. At the end of these four years, the federal government's public debt would have

increased by $20 billion.

The crowding-out effect of expansionary fiscal policy suggests that

increases in government spending financed through borrowing will increase the interest rate and thereby reduce investment.

If the MPS in an economy is 0.1, government could shift the aggregate demand curve rightward by $40 billion by

increasing government spending by $4 billion.

If the MPS in an economy is 0.10, government could shift the aggregate demand curve rightward by $80 billion by

increasing government spending by $8 billion.

The short-run aggregate supply curve represents circumstances where

input prices are fixed, but output prices are flexible

Discretionary fiscal policy refers to

intentional changes in taxes and government expenditures made by Congress to stabilize the economy.

The average tax rate required to service the public debt is roughly measured by

interest on the debt as a percentage of the GDP.

The purchasing power of money and the price level vary

inversely.

Contractionary fiscal policy is so named because it

is aimed at reducing aggregate demand and thus achieving price stability.

The Federal Reserve System

is basically an independent agency.

Expansionary fiscal policy is so named because it

is designed to expand real GDP.

Payment of interest on the U.S. public debt

is thought to increase income inequality.

The economy's long-run aggregate supply curve

is vertical.

A decline in investment will shift the AD curve to the

left by a multiple of the change in investment.

Graphically, cost-push inflation is shown as a

leftward shift of the AS curve.

The largest component of the money supply (M1) is

liquid deposits other than checkable deposits at commercial banks.

In the extended aggregate demand-aggregate supply model,

long-run equilibrium occurs at the intersection of the aggregate demand curve, the short-run aggregate supply curve, and the long-run aggregate supply curve.

An increase in the money supply will

lower interest rates and increase the equilibrium GDP

Actions or communications by a central bank intended to help it achieve its macroeconomic policy objectives defines

monetary policy.

An increase in nominal GDP increases the demand for money because

more money is needed to finance a larger volume of transactions.

An economy's aggregate demand curve shifts leftward or rightward by more than changes in initial spending because of the

multiplier effect.

Which of the following is a tool of monetary policy?

open-market operations

The aggregate-demand curve

shows the amount of real output that will be purchased at each possible price level

The aggregate supply curve

shows the various amounts of real output that businesses will produce at each price level.

Stagflation refers to a

simultaneous increase in the inflation rate and the unemployment rate.

The aggregate supply curve (short-run)

slopes upward and to the right.

Inflation accompanied by stagnation in the rate of growth in output and an increase in unemployment in the economy is known as

stagflation.

A view of macroeconomics that emphasizes the role of costs and aggregate supply in explaining inflation, unemployment, and economic growth is

supply-side economics.

The equilibrium price level and level of real output occur where

the aggregate demand and aggregate supply curves intersect.

Refer to the diagrams. Suppose that government undertakes fiscal policy designed to increase aggregate demand from AD1 to AD2 and thereby to increase GDP from X to Z. In terms of graph B, which of the following might explain why GDP increases to Y rather than to Z?

the crowding-out effect

The financing of a government deficit increases interest rates and, as a result, reduces investment spending. This statement describes

the crowding-out effect.

If the Fed buys government securities in the open market,

the demand for securities will increase, causing the price of securities to increase, and their interest rates to decrease.

The public debt is the amount of money that

the federal government owes to holders of U.S. securities.

If the quantity of money demanded exceeds the quantity supplied,

the interest rate will rise.

Refer to the diagram. The initial aggregate demand curve is AD1, and the initial aggregate supply curve is AS1. If government offsets the decline in real output resulting from short-run cost-push inflation by increasing aggregate demand from AD1 to AD2

the price level will rise from P2 to P3.

Open-market operations refer to

the purchases and sales of U.S. government securities by the Fed.

If the Fed buys government securities in the open market,

the securities go into the Fed's vault, and the Fed creates new money to pay for them.

Checkable deposits are classified as money because

they can be readily used in purchasing goods and paying debts.

The determinants of aggregate supply

include resource prices and changes in productivity.

In an effort to avoid a recession, the government implements a tax rebate program, effectively cutting taxes for households. We would expect this to

increase aggregate demand.

Given a fixed upsloping AS curve, a rightward shift of the AD curve will

increase both the price level and real output.

In the diagram, a shift from AS2 to AS3 might be caused by a(n)

increase in business taxes and costly government regulation.

In the diagram, a shift from AS1 to AS3 might be caused by a(n)

increase in the prices of imported resources.

A major advantage of the built-in or automatic stabilizers is that they

require no legislative action by Congress to be made effective.

An increase in net exports will shift the AD curve to the

right by a multiple of the change in net exports.

If investment increases by $10 billion and the economy's MPC is 0.8, the aggregate demand curve will shift

rightward by $50 billion at each price level.

Graphically, demand-pull inflation is shown as a

rightward shift of the AD curve along an upsloping AS curve.

The group that sets the Federal Reserve System's policy on buying and selling government securities (bills, notes, and bonds) is the

Federal Open Market Committee (FOMC).

In the U.S. economy, the money supply is controlled by the

Federal Reserve System.

The conduct of monetary policy in the United States is the main responsibility of the

Federal Reserve System.

The massive stimulus checks sent out by the U.S. government in 2020 in an attempt to fight off the economic effects of the pandemic

generated a large increase in disposable income and saving.

The crowding-out effect suggests that

government borrowing to finance the public debt increases the real interest rate and reduces private investment.

The crowding-out effect of expansionary fiscal policy suggests that

government spending increases at the expense of private investment.

Fractional reserve banking refers to a system where banks

hold only a fraction of their deposits in their reserves.

A checking account balance is money because it

performs the functions of money.

A rightward shift in the aggregate supply curve is best explained by an increase in

productivity.

In the diagram, a shift from AS3 to AS2 might be caused by an increase in

productivity.

A newspaper headline reads, "Fed Raises Discount Rate for Third Time This Year." This headline indicates that the Federal Reserve is most likely trying to

reduce inflation in the economy.

Recessions have contributed to the public debt by

reducing national income and therefore tax revenues.