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QUESTION 1

Monetary policy is determined by

the Federal Reserve and involves changing the money supply.

the Federal Reserve and involves changing government spending
and taxation.

the president and Congress and involves changing the money
supply.

the president and Congress and involves changing government
spending and taxation.

0.1 points   

QUESTION 2

Fiscal policy is determined by

the president and Congress and involves changing government
spending and taxation.

the president and Congress and involves changing the money
supply.

the Federal Reserve and involves changing government spending
and taxation.

the Federal Reserve and involves changing the money supply.

0.1 points   

QUESTION 3

The Federal Open Market Committee is ​

​the group at the Federal Reserve that sets monetary policy.

​in charge of tax collection.

​the group that sets the amount of government spending.

​the group that reviews income assistance programs.

0.1 points   

QUESTION 4

Fiscal policy refers to the idea that aggregate demand is
affected by changes in

government spending and taxes.

the money supply.

trade policy.

All of the above are correct.

0.1 points   

QUESTION 5

Which of the following is an example of an increase in
government purchases?

The government builds new roads.

The Federal Reserve purchases government bonds.

The government decreases personal income taxes.

The government increases unemployment insurance benefit
payments.

0.1 points   

QUESTION 6

1.png Question: QUESTION 1Monetary policy is determined bythe Federal Reserve and involves changing t...

Refer to Figure 34-8. An increase in government
purchases will

shift aggregate demand from AD1 to
AD2.

shift aggregate demand from AD1 to
AD3.

cause movement from point A to point B along AD1.

have no effect on aggregate demand.

0.1 points   

QUESTION 7

Refer to Figure 34-8. An increase in taxes
will

shift aggregate demand from AD1 to
AD3.

shift aggregate demand from AD1 to
AD3.

cause movement from point A to point B along AD1.

have no effect on aggregate demand.

0.1 points   

QUESTION 8

The marginal propensity to consume (MPC) is defined as
the fraction of

extra income that a household consumes rather than saves.

extra income that a household either consumes or saves.

total income that a household consumes rather than saves.

total income that a household either consumes or saves.

0.1 points   

QUESTION 9

The multiplier for changes in government spending is calculated
as

1/(1 – MPC).

1/MPC.

(1 – MPC)/MPC.

1/(1+MPC).

0.1 points   

QUESTION 10

If the MPC = 4/5, then the government purchases
multiplier is

5

20

4/5

5/4

0.1 points   

QUESTION 11

If the multiplier is 3, then the MPC is

2/3.

4/3.

3/4.

1/3.

0.1 points   

QUESTION 12

. In a certain economy, when income is $100, consumer spending
is $60. The value of the multiplier for this economy is 4. It
follows that, when income is $101, consumer spending is

$60.75.

$60.25.

$61.33.

$64.00.

0.1 points   

QUESTION 13

Which of the following policy actions shifts the
aggregate-demand curve?

All of the above are correct.

an increase in government spending

an increase in taxes

an increase in the money supply

0.1 points   

QUESTION 14

Government purchases are said to have a

multiplier effect on aggregate demand.

multiplier effect on aggregate supply.

liquidity-enhancing effect on aggregate supply.

liquidity-enhancing effect on aggregate demand.

0.1 points   

QUESTION 15

The multiplier effect states that there are additional shifts in
aggregate demand from fiscal policy, because it

increases income and thereby increases consumer spending.

decreases income and thereby increases consumer spending.

reduces investment and thereby increases consumer spending.

increases the money supply and thereby reduces interest
rates.

0.1 points   

QUESTION 16

The government builds a new water-treatment plant. The owner of
the company that builds the plant pays her workers. The workers
increase their spending. Firms from which the workers buy goods
increase their output. This type of effect on spending
illustrates

the multiplier effect.

the crowding-out effect.

the Fisher effect.

the wealth effect.

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