Question 1

An increase in the money supply decreases the interest rate in the short run.

Accepted Answer

A) True 
 B)False

Question 2

Fiscal policy affects the economy

Accepted Answer

A)  only in the short run.
B)  only in the long run.
C)  in both the short and long run.
D)  in neither the short nor the long run.E) A) and B)
F) B) and C)

Question 3

Suppose the multiplier has a value that exceeds 1,and there are no crowding out or investment accelerator effects.Which of the following would shift aggregate demand to the right by more than the increase in expenditures?

Accepted Answer

A)  an increase in government expenditures
B)  an increase in net exports
C)  an increase in investment spending
D)  All of the above are correct.E) A) and B)
F) A) and C)

Question 4

The wealth effect stems from the idea that a higher price level

Accepted Answer

A)  increases the real value of households' money holdings.
B)  decreases the real value of households' money holdings.
C)  increases the real value of the domestic currency in foreign-exchange markets.
D)  decreases the real value of the domestic currency in foreign-exchange markets.E) A) and B)
F) B) and C)

Question 5

In the short run,

Accepted Answer

A)  the price level alone adjusts to balance the supply and demand for money.
B)  output responds to changes in the aggregate demand for goods and services.
C)  changes in the money supply cause a proportional change in the price level.
D)  increases in the money supply shift the aggregate supply curve causing output to rise.E) C) and D)
F) A) and D)

Exam 35: The Influence of Monetary and Fiscal Policy on Aggregate Demand

An increase in the money supply decreases the interest rate in the short run.

Correct Answer
verified

The wealth effect stems from the idea that a higher price level

Correct Answer
verified

Suppose the multiplier has a value that exceeds 1,and there are no crowding out or investment accelerator effects.Which of the following would shift aggregate demand to the right by more than the increase in expenditures?

Correct Answer
verified

Fiscal policy affects the economy

Correct Answer
verified

In the short run,

Correct Answer
verified

Exam 35: The Influence of Monetary and Fiscal Policy on Aggregate Demand

An increase in the money supply decreases the interest rate in the short run.

Correct AnswerverifiedShow Answer

The wealth effect stems from the idea that a higher price level

Correct AnswerverifiedShow Answer

Suppose the multiplier has a value that exceeds 1,and there are no crowding out or investment accelerator effects.Which of the following would shift aggregate demand to the right by more than the increase in expenditures?

Correct AnswerverifiedShow Answer

Fiscal policy affects the economy

Correct AnswerverifiedShow Answer

In the short run,

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified