7. Automatic stabilizers a. increase the magnitude of the multiplier of governme

ID: 1125749 • Letter: 7

Question

7. Automatic stabilizers

a. increase the magnitude of the multiplier of government purchases.

b. decrease the magnitude of the multiplier of government purchases.

c. have no effect on the magnitude of the multiplier of government purchases.

d. reduce to zero the magnitude of the multiplier of government purchases

9. Compared to fiscal policy, monetary policy has the advantage of

a. faster to implement because it cuts out the law-making time lag.

b. being less being prone to errors in estimating potential GDP than fiscal policy.

c. being more accurate in forecasting future events than fiscal policy.

d. having a more direct impact on the economy than fiscal policy.

10. When the economy is in a recession, the Fed can ___ the interest rate so as to ___ AD and ___ real GDP.

a. lower; increase; decrease

b. raise; decrease; increase

c. lower; increase; increase

d. raise; increase; decrease

15. Selling bonds successfully accomplishes a contractionary monetary policy that resolves an inflationary gap if

a. it leads to a drop-in bond price, decrease in interest, and decrease in net exports and/or investment.

b. it leads to an increase in bond price, decrease in interest, an increase in net exports and/or investment.

c. it leads to a rise in bond price, decrease in interest, and rise in net exports and/or investment.

d. it leads to a rise in bond price, rise in interest, and rise in net exports and/or investment.

25. To convert nominal value into real value we

a. multiply the nominal value by the price level in that year

b. multiply the real value by the price level in that year.

c. multiply the nominal value and the real value.

d. cannot solve the problem because it is indeterminate.

38. To close output gaps, whether recessionary or inflationary, the government uses

a. monetary and fiscal policy.

b. monetary policy alone always.

c. fiscal policy alone always.

7. The correct answer is B.

9. The correct answer is A.

10. The correct answer is C.

15. The correct answer is D.

25. The correct answer is B.

38. The correct answer is A.

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.