When we talk about injections in the classical model, we refer to
a. taxes
b. total government purchases.
c. federal government purchases only.
d. state government purchases only.
e. local government purchases only.
Transfer payments are
a. payments for goods or services that individuals provide
b. funds given to people or organizations when no good or service is received in
exchange
c. included in the government purchases category of GDP
d. examples of government investment
e. used to pay state employees
In the short run, a decrease in government purchases would
a. decrease real GDP because of the multiplier effect and price level changes, but be
offset somewhat by decreases in the interest rate
b. decrease real GDP because of the increases in the price level and increases in the
interest rate
c. decrease real GDP because of the multiplier effect and increase in the interest rate,
but be offset somewhat by decreases in the price level
d. decrease real GDP because of the multiplier effect, but be offset somewhat by
decreases in the price level and the interest rate
e. not change output because of the multiplier effect; price level and interest rate
changes completely cancel each other out.
The opportunity cost of holding money is
a. the dollar cost necessary to change other assets into money
b. the time cost of accessing funds
c. the value of the goods and services a person is able to obtain with the money
d. the interest a person could have earned by holding other forms of wealth instead
e. zero, because opportunity costs only apply to real assets, goods and services.
In the classical model, fiscal policy has no demand-side effects on output or
employment..
The U.S. government has tended to keep its deficit-to-GDP ratio significantly above 10
percent for the last 50 years.
The difference between an interest rate and some other, benchmark interest rate is
known as the
a. spread.
b. rate difference
c. rate of return differential.
d. rent.
e. income differential.
]Which of the following would not cause the AD curve to shift?
a. A change in the money supply
b. The public’s expectations of a fall in the interest rate
c. A change in aggregate expenditure caused by a change in the price level
d. A change in fiscal policy
e. A change in autonomous consumption spending.
The core problem faced by all economic systems is that
a. scarcity forces each of us to make choices
b. the government must intervene to allocate scarce resources
c. of matching people’s wants with their needs
d. of allocating unlimited resources
e. it needs to maximize each household’s material standard of living
The demand curve for dolls shows the quantity of dolls demanded
a. by suppliers of those dolls
b. by U.S. consumers
c. at the equilibrium price for dolls
d. at each level of income
e. at each possible price of dolls