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In liquidity preference theory,an increase in the interest rate,other things the same,decreases the quantity of money demanded,but does not shift the money demand curve.

A) True
B) False

Correct Answer

verifed

verified

A significant lag for monetary policy is the time it takes to for a change in the money supply to change the economy.A significant lag for fiscal policy is the time it takes to pass legislation authorizing it.

A) True
B) False

Correct Answer

verifed

verified

True

If the inflation rate is zero,then the nominal and real interest rate are the same.

A) True
B) False

Correct Answer

verifed

verified

The theory of liquidity preference is largely at odds with the basic ideas of supply and demand.

A) True
B) False

Correct Answer

verifed

verified

According to the theory of liquidity preference,the interest rate adjusts to balance the supply of,and demand for,loanable funds.

A) True
B) False

Correct Answer

verifed

verified

Sometimes,changes in monetary policy and/or fiscal policy are intended to offset changes to aggregate demand over which policymakers have little or no control.

A) True
B) False

Correct Answer

verifed

verified

One of President Obama's first policy initiatives was a stimulus bill that included large increases in government spending.

A) True
B) False

Correct Answer

verifed

verified

Other things the same,an increase in taxes shifts aggregate demand to the left.In the short run this makes output fall which makes the interest rate rise.

A) True
B) False

Correct Answer

verifed

verified

During recessions,unemployment insurance payments tend to rise.

A) True
B) False

Correct Answer

verifed

verified

The Fed can influence the money supply by changing the interest rate it pays banks on the reserves they are holding.

A) True
B) False

Correct Answer

verifed

verified

The main criticism of those who doubt the ability of the government to respond in a useful way to the business cycle is that the theory by which money and government expenditures change output is flawed.

A) True
B) False

Correct Answer

verifed

verified

The automatic stabilizers in the U.S.economy are sufficiently strong to prevent recessions.

A) True
B) False

Correct Answer

verifed

verified

False

When the Fed announces a target for the federal funds rate,it essentially accommodates the day-to-day fluctuations in money demand by adjusting the money supply accordingly.

A) True
B) False

Correct Answer

verifed

verified

If the MPC is 4/5,the multiplier is 5/4.

A) True
B) False

Correct Answer

verifed

verified

False

Unemployment insurance and welfare programs work as automatic stabilizers.

A) True
B) False

Correct Answer

verifed

verified

When the Fed increases the money supply,the interest rate decreases.This decrease in the interest rate increases consumption and investment demand,so the aggregate-demand curve shifts to the right.

A) True
B) False

Correct Answer

verifed

verified

According to the IGM poll,most economists think that the benefits of ARRA exceeded the costs.

A) True
B) False

Correct Answer

verifed

verified

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

A) True
B) False

Correct Answer

verifed

verified

During a recession unemployment benefits rise.This rise in benefits makes aggregate demand higher than otherwise.

A) True
B) False

Correct Answer

verifed

verified

In principle,the government could increase the money supply or increase government expenditures to try to offset the effects of a wave of pessimism about the future of the economy.

A) True
B) False

Correct Answer

verifed

verified

Showing 1 - 20 of 50

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