macro test 3
False
A decrease in taxes is one way to pursue a contractionary fiscal policy because it will make government revenues contract.
Supply to increase
A fall in labor costs will cause aggregate:
Rightward shift in the economy's aggregate demand curve
An expansionary fiscal policy is shown as a:
Increase (or shift right) in aggregate demand now
An expected increase in the prices of consumer goods in the near future will:
leftward shift of the AS curve
Graphically, cost-push inflation is shown as a:
Consume is .75
If Matt's disposable income increases from $4,000 to $4,500 and his level of saving increases from $200 to $325, it may be concluded that his marginal propensity to:
Increased borrowing by the government
Crowding out is a decrease in private investment caused by:
intentional changes in taxes and government expenditures made by Congress to stabilize the economy.
Discretionary fiscal policy refers to:
Decreases and tax revenues increase
Due to automatic stabilizers, when the nation's total income rises, government transfer spending:
APC+APS=1
which of the following is correct?
$6 billion
Assume the MPC is 2/3. If investment spending increases by $2 billion, the level of GDP will increase by:
Decrease aggregate demand and increase aggregate supply.
If the U.S. dollar appreciates in value relative to foreign currencies, then this will:
Foreign buyers will find U.S. goods become more expensive
If the dollar appreciates relative to foreign currencies, then:
True
If the government wants to reduce unemployment using fiscal policy, it may do so by increasing government spending
profits are highly variable
Investment spending tends to be unstable because:
specific level of total income that is consumed
The APC can be defined as the fraction of a:
the amounts households intend to consume at various possible levels of aggregate income.
The consumption schedule shows:
Real GDP
The goal of expansionary fiscal policy is to increase:
The real interest rate and investment
The investment demand curve portrays an inverse (negative) relationship between
Level of income
The most important determinant of consumption and saving is the:
an increase in investment can cause GDP to change by a larger amount.
The multiplier effect means that:
change in GDP/initial change in spending
The multiplier is defined as:
change in GDP resulting from a change in spending
The multiplier is useful in determining the:
1/MPS
The multiplier is:
Magnifies initial changes in spending into larger changes in GDP
The practical significance of the multiplier is that it:
Wages tend to be inflexible downward
Wage contracts, efficiency wage, and the minimum wage are explanations for why:
lower expected rates of return on investment
Which of the following would decrease investment demand?
A decrease in wealth
Which of the following would shift the saving schedule upward?
the APC rises and the APS falls
if there is a decrease in disposable income in an economy, then: