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Changes in government spending and/or taxes as the result of legislation is called:
a. open market operations of the Federal Reserve.
b. discretionary fiscal policy.
c. balanced budget operations.
d. discretionary monetary policy.
Gross private domestic investment includes business:
a. purchases of capital goods, all new construction, and purchases of consumer durable
goods.
b. purchases of capital goods, all new construction, and inventory investment.
c. purchases of capital goods, all new commercial construction, and inventory
investment.
d. purchases of capital goods, all new residential construction, and inventory
investment.
e. purchases of all types of durable goods, all new construction, and inventory
investment.
If disposable income is $400 billion, autonomous consumption is $60 billion, and MPC
is 0.8, what is the level of saving?
a. $20 billion.
b. $210 billion.
c. $380 billion.
d. $590 billion.
e. $780 billion.
Exhibit 16-6 Money, investment and product markets
In Exhibit 16-6, if the Fed believes the economy is at AD3, how might it engineer a
decline in the price level?
a. By decreasing the money supply, the interest rate falls, investment rises, and
aggregate demand falls, causing the price level to fall.
b. By decreasing the money supply, the interest rate rises, investment rises, and
aggregate demand rises, causing the price level to fall.
c. By decreasing the money supply, the interest rate rises, investment falls, and
aggregate demand falls, causing the price level to fall.
d. By increasing the money supply, the interest rate rises, investment rises, and
aggregate demand falls, causing the price level to fall.
e. By increasing the money supply, the interest rate rises, investment falls, and
aggregate demand rises, causing the price level to fall.
The national debt is best described as the:
a. amount by which this year's federal spending exceeds its taxes.
b. value of all U. S. Treasury bonds owned by foreigners.
c. sum of all federal budget deficits, past and present.
d. percentage of GDP needed to finance a country's investment.
After 1945, the national debt as a percent of GDP:
a. decreased slightly.
b. decreased substantially.
c. remained about the same.
d. increased slightly.
e. increased substantially.
Exhibit 18-5 International currency markets
Exhibit 18-5 displays
the international currency market for yen in terms of dollars and dollars in terms of yen.
The demand curve in graph 18-5(B) is determined by:
a. U.S. citizens attempting to purchase Japanese-made goods.
b. Japanese attempting to purchase U.S.-made goods.
c. U.S. businesses attempting to sell to the Japanese.
d. Japanese businesses attempting to sell to the U.S.
e. the U.S. government attempting to unload dollars to the international market.
The Keynesian view stresses that:
a. demand creates its own demand.
b. there is direct relationship between consumer spending and disposable income.
c. when aggregate expenditures (demand) can be forever less than full-employment
output therefore prolonged unemployment will persist.
d. all of these are true.
Exhibit 10-3 Aggregate supply and demand curves
A shift in the aggregate supply curve in Exhibit 10-3 from AS1 to AS2 would be caused
by a(n):
a. increase in consumer spending.
b. increase in input prices.
c. decrease in input prices.
d. decrease in real output.
Which one of the following items appears on a balance sheet?
a. Accounts payable
b. Sales revenue
c. Utilities expense
d. Cost of goods sold
Which of the following is a reason for the Keynesian view that monetary policy plays a
minor role in affecting the economy?
a. The money demand curve is vertical.
b. The investment curve is very steep.
c. The money demand curve is horizontal at any interest rate.
d. The monetary rule.
