22) A reduction in government expenditure or an increase in taxes is defined as:
ID: 1092671 • Letter: 2
Question
22) A reduction in government expenditure or an increase in taxes is defined as: A) contractionary fiscal policy. B) expansionary monetary policy. C) contractionary monetary policy. D) expansionary fiscal policy.
23) A decrease in the government expenditures will: 23) ______ A) shift the aggregate expenditures line downwards and shift the aggregate demand curve to the left. B) shift the aggregate expenditures line upwards and shift the aggregate demand curve to the left. C) shift the aggregate expenditures line downwards and shift the aggregate demand curve to the right. D) shift the aggregate expenditures line upwards and shift the aggregate demand curve to the right.
24) Refer to Table 11.6. In this example, the government spending multiplier is: 24) ______ A)0.5. B)1. C)2. D)-2.
25) Refer to Table 11.6. If net taxes (T) increases from 200 to 300, the new equilibrium output is: A) $5500. B) $6000. C) $5700. D) $5600.
26) Assume that C = 150 + 0.9Y and I = 50. The tax multiplier is: 26) ______ A) -9. B) -10. C) 10. D) 0.9.
27) The accelerator theory describes the impact of: 27) ______ A) a change in planned aggregate expenditures on future GDP. B) a change in future GDP on investment. C) a change in investment on future GDP.
D) a change in government spending on future GDP.
28) If K = $200, t = 30 years, i = 5%, the present value (PV) of a payment to be received in 30 years is: A) $864.39. B) $46.27. C) $190.48. D) none of the above
29) The decisions concerning the money supply are made by: A) the presidents of the district central banks. B) Congress. C) the Board of Governors.
D) the FOMC.
Explanation / Answer
22 D) expansionary fiscal policy
23) A) shift the aggregate expenditures line downwards and shift the aggregate demand curve to the left.
24 A)0.5
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