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The tax multiplier is the number that, when multiplied by the
a. budget deficit, gives us the change in total spending.
b. budget deficit, gives us the change in the public debt.
c. change in taxes, gives us the change in total spending.
d. change in government spending, gives us the change in total spending.
A private equity firm is a group of investors that buys up the publicly traded stock of a
large corporation and then takes the corporation private.
a. True
b. False
Which of the following will increase the money supply?
a. increasing the required reserve ratio
b. an open market sale
c. raising the discount rate relative to the federal funds rate
d. none of the above
Suppose that in a certain nation the flat income tax rate of 40 percent is reduced to 35
percent and as a result the tax base falls from $400 billion to $375 billion. As a result,
tax revenues __________, indicating the nation is on the __________ portion of its
Laffer curve.
a. rise; upward-sloping
b. rise; downward-sloping
c. fall; upward-sloping
d. fall; downward-sloping
Which of the following statements is false?
a. Keynes believed that the level of investment depends on more than just the interest
rate.
b. Saving is the difference between disposable income and consumption.
c. Keynes believed that saving is more responsive to changes in income than to changes
in the interest rate.
d. According to Keynes, wage rates may fall too quickly when the economy is in a
recessionary gap.
If a person uses money to buy a pair of shoes, money is functioning as
a. a unit of account.
b. a store of value.
c. a medium of exchange.
d. none of the above
Economists who view the AS curve as vertical believe that government
________________ to raise Real GDP (in the short run) from the demand side of the
economy.Economists who view the AS curve as upward-sloping believe that changes in
Real GDP (in the short run) _________ result from changes on the demand side.
a. can do many things; cannot
b. cannot do anything; may
c. can do many things; may
d. cannot do anything; cannot
According to the classical theorists, it is impossible to have a
a. surplus of a particular product.
b. shortage of a particular product.
c. decrease in the demand for a product.
d. decrease in the supply of a product.
e. general overproduction of products.
The aggregate supply curve in the short run is vertical in __________ version of the
AD-AS framework.
a. the simple quantity theory of money
b. the monetarist
c. both the simple quantity theory of money and the monetarist
d. neither the simple quantity theory of money nor the monetarist
Suppose Andrea is taking just two courses and is at a point on her PPF of grades for
those two courses.Now this PPF shifts inward and Andrea moves to a point on the new
PPF.Which of the following would be impossible after her PPF has shifted inward
compared to before the PPF shifted?
a. both of her grades to fall
b. both of her grades to rise
c. one of her grades to rise and the other grade to fall
d. one of her grades to fall while the other grade stays constant
The quantity supplied of money is assumed (in the textbook) to be
a. inversely related to the interest rate.
b. directly related to the interest rate.
c. independent of the interest rate.
d. determined exclusively by banks.
e. c and d
According to new Keynesian theory, if policy is correctly anticipated, increases in
aggregate demand will stimulate the economy to higher levels of Real GDP and lower
levels of unemployment in
a. the short run or the long run.
b. neither the short run nor the long run.
c. the short run, but not in the long run.
d. the long run, but not in the short run.
