Macroeconomics Fina
A restrictive monetary policy is designed to shift the
AD curve leftward
The following are important problems associated with the public debt, except
Government borrowing to finance the debt may lead to too much private investment
Automatic stabilizers smooth fluctuations in the economy because they produce changes in the government's budget that
Help offset changes in GDP
A decrease in government spending and a cut in taxes would be a pair of fiscal policies that reinforce each other
False
A decrease in taxes is one way to pursue a contractionary fiscal policy because it will make government revenues contract.
False
A restrictive monetary policy may be frustrated if the investment-demand curve shifts to the left
False
Demand-pull inflation can be restrained by increasing government spending and reducing taxes
False
The asset demand for money varies inversely with the nominal GDP
False
The goal of expansionary fiscal policy is to reign in inflation
False
A tax reduction of a specific amount will be more expansionary the
larger the economy's MPC is
A contractionary fiscal policy is shown as a
leftward shift in the economy's AD curve
Monetary policy is expected to have its greatest impact on
Ig
The goal of expansionary fiscal policy is to increase
Real GDP
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 inflationary pressures in the economy
The two reasons why bankruptcy is a false concern about the public debt are
Refinancing and taxation
Built-in stability is exemplified by the fact that with a progressive tax system, net tax revenues decrease when GDP decreases
True
If the government wants to reduce unemployment using fiscal policy, it may do so by increasing government spending
True
Lowering the reserve ratio
Turns required reserves into excess reserves
Federal Reserve Notes in circulation are
a liability as viewed by the Federal Reserve Banks
A wealthy executive is holding money, waiting for a good time to invest in the stock market. This action would be an example of the
asset demand for money
Discretionary fiscal policy refers to
intentional changes in taxes and government expenditures made by Congress to stabilize the economy
The intent of contractionary fiscal policy is to
decrease AD
Assume the economy is operating at less than full employment. An expansionary monetary policy will cause interest rates to _____, which will ______ investment spending
decrease, increase
Due to automatic stabilizers, when the nation's total income rises, government transfer spending
decreases and tax revenues increase
The crowding-out effect suggests that
increases in government spending may reduce private investment
A budget surplus means that
government revenues are greater than expenditures in a given year
Interest paid on reserves held at the Fed
incentivizes financial institutions to hold more reserves and reduce risky lending
An increase in nominal GDP will
increase the transactions demand and the total demand for money
Crowding out is a decrease in private investment caused by
increased borrowing by the government
Expansionary fiscal policy moves a point
rightward on a graph
As the economy declines into recession, the collection of personal income tax revenue automatically falls. This illustrates how a progressive income-tax system
serves as an automatic stabilizer for the economy
A specific reduction in government spending will dampen demand-pull inflation by a greater amount the
smaller the economy's MPS
A television report states: "The Federal Reserve will lower the discount rate for the fourth time this year." this report indicates that the Federal Reserve is most likely trying to
stimulate the economy
If severe demand-pull inflation was occurring in the economy, proper government policies would involve a government
surplus, the sale of securities in the open market, a higher discount rate, and high reserve requirements.
