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.Management Sciences
Category: Macroeconomic Policy Tools
The initial effect of an increase in the money supply is to ?
A. increase the interest rate
B. increase the price level
C. decrease the price level
D. decrease the interest rate
When an increase in government purchases increases the income of some people, and those people spend some of that increase in income on additional consumer goods, we have seen a demonstration of ?
A. The multiplier effects
B. supply side economics
C. None of these answers
D. The crowding out effect
Which of the following best describes how an increase in the money supply shift the aggregate demand curve ?
A. The money supply shifts right prices fall spending increases and the aggregate demand curve shifts right
B. The money supply shifts right the interest rate rises investment decreases and the aggregate demand curve shifts left
C. The money supply shifts right the interest rate falls, investment increases, and the aggregate demand curve shifts right
D. The money supply shifts right, prices rise, demand curve shifts left
Which of the following statements about stabilization policy is not true ?
A. Many economists prefer automatic stabilizers because they affect the economy with a shorter lag than activist stabilization policy
B. None of these answers are true
C. Long lags enhance the ability of policy makers to fine tune the economy
D. When policy makers implement activist stabilization policies there is a significant risk that their policies may actually have a destabilizing effect
Keynes liquidity preference theory of the interest rate suggests that the interest rate is determined by ?
A. aggregate supply and aggregate demand
B. the supply and demand for loanable funds
C. the supply and demand for money
D. the supply and demand for labor
Which of the following is an automatic stabilizer ?
A. Spending on public schools
B. Military spending
C. All of these answers are automatic stabilizers
D. spending on the space shuttle
E. Unemployment benefits
The initial impact of an increase in government spending is to shift ?
A. aggregate demand to the right
B. aggregate demand to the left
C. aggregate supply to the right
D. aggregate supply to the left
Suppose the government increases its purchases by Rs16 billion. If the multiplier effect exceeds the crowding out effect, then ?
A. The aggregate supply curve shifts to the right by more than Rs 16 billion
B. The aggregate demand curve shifts to the left by more than Rs 16 billion
C. The aggregate demand curve shifts to the right by more than Rs 16 billion
D. the aggregate supply curve shifts to the left by more than Rs 16 billion
For the Eurozone countries, the most important source of the downward slope of the aggregate demand curve is probably ?
A. The wealth effect
B. None of these answers
C. The exchange-rate effect
D. The fiscal effect
E. The interest-rate effect
When supply and demand for money are expressed in a graph with the interest rate on the vertical axis and the quantity of money on the horizontal axis an increase in the price level ?
A. shifts money demand to the right and increases the interest rate
B. None of these answers
C. shifts money demand to the right and decreases the interest rate
D. shifts money demand to the left and increases the interest rate
E. shifts money demand to the left and decrease the interest rate
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