Exam 3 Econ

A decrease in taxes would move the economy from c to

increase imports and decrease exports

Fiscal policy is determined by

the president and congress and involves changing government spending and taxation

When a recession is the problem

you want an expansionary policy

Change in Total is

1. Multiplier 1/1-MPC

If the MPC= 4/5

1. then the government purchases multiplier is 5

If the MPC is 5/6 then the multiplier is

6

Income =

C

Which of the following is not included in aggregate demand?

Purchases of stock and bonds

A country sells more to foreign countries than it buys from them it has

a trade surplus and positive net exports.

which of the following shifts long run aggregate supply right?

an increase in either technology of the human capital stock

If the U.S. real exchange rate appreciates, U.s. exports

decrease, and U.S. imports increase

During a recession, the government should pursue

expansionary fiscal policy, increasing government spending

If the central bank increases the money supply. then in the short run prices

rise and unemployment falls

When the fed buys government bonds the reserves of the banking systems increase

so the money supply increases.

when the peso get stronger relative to the dollar

the US trade deficit with Mexico falls

During a recession

the economy experiences falling employment and prices

the dollar is said to appreciate against the euro if

the exchange rate rises. there things the same it will cost more euros to buy U.S. goods (imports rise, so our exports fall)

During an expansion

the federal government should attempt to fight inflation by decreasing aggregate demand

During an expansion

the federal reserve should pursue a contractionary monetary policy by decreasing the money supply

Monetary policy is determined by

the federal reserves (FED= Banks ) and involves the money supply. (Discount Rate, Open Market Operations)

A decrease in taxes shifts aggregate demand to the right,

the larger the multiplier is the farther it shifts