Answered: According to Keynes the source of high…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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According to Keynes the source of high unemployment is: a. Excessive aggregate demand b. Insufficient aggregate demand c. An increase in aggregate supply d. Say’s law The federal government can alter aggregate demand by all of the following except: a. Purchasing more or fewer goods and services b. Raising or lowering taxes c. Increasing productivity or output per hour d. Changing the level of income transfers Which of the following is an example of fiscal policy? a. Fighting the war on terror b. Giving people school vouchers c. President’s Obama’s tax cut package d. All of the above are examples Which of the following is an example of fiscal policy? a. Fighting the war on terror b. Giving people school vouchers c. President’s Obama’s tax cut package d. All of the above are examples If MPC is .80, and government spending increases by $200 billion then: a. Total spending will increase by $200 billion b. Total spending will increase by $400 billion c. Total spending will decrease by $200 billion d. Total spending will increase by $1000 billion The desired tax cut to cure a recessionary gap will be: a. Equal to the desired fiscal stimulus divided by MPC b. Equal to the desired fiscal stimulus multiplied by MPC c. Equal to the amount of the recessionary gap d. Equal to the fiscal stimulus divided by the multiplier Which of the following will not undermine the effectiveness of fiscal policy? a. Private borrowing may be crowded out by government borrowing b. Time lags c. Multiplier effects d. Politicians will disagree about the proper fiscal policy Crowding out occurs when the government: a. Increases taxes, thus causing a decrease in consumption b. Issues debt, thus making it more difficult for the private sector to issue debt c. Prints money, which displaces currency d. Cancels out the effectiveness of the Fed’s policy measures A tax stimulus measure might not be as powerful as policy makers hope because: a. The recipients might save the money b. The recipients might spend it on paying bills c. The recipients might spend it on imported goods d. All of the above A tax stimulus measure might not be as powerful as policy makers hope because: a. The recipients might save the money b. The recipients might spend it on paying bills c. The recipients might spend it on imported goods d. All of the above

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