A. involves an expansion of the nation\'s moncy supply B. necessarily expands th

Question

A. involves an expansion of the nation's moncy supply B. necessarily expands the size of govermment C. is aimed at achieving greater price stability. D. is designed to expand real GDP 10. The desire to hold money for transactions purposes arises beus A receipts of income and expenditures are not perfectly synchronized. B. people fear that prices will rise. C. households want money on hand in case a good financial investment opportunity arises. D. low interest rates reduce the opportunity cost of holding money. in a new machine that costs $5,000 a year but which is expected to produce an increase in total revenue of $5,200 a year. The current real rate of interest is 7 percent. The firm should: A. Undertake the investment because the expected rate of return of 10 percent is greater than the real rate of interest the investment because the expected rate of return of 8 percent is greater than the real rate of interest the investment because the expected rate of return of 6 percent is less than the real rate of interest investment because the expected rate of return of 4 percent is less than the real rate of interest C. Not undertake D. Not undertake the 12. The Mi money supply is composed of: A. All coins and paper money held by the general public and the banks B. Bank deposits of households and business firms C. Bank deposits and mutual funds D. Checkable deposits and currency in circulation 13. If you place a part of your summer earnings in a savings account, you are using money primarily as a: A. medium of exchange. B. store of value. C. unit of account. D. standard of value. 14. The purchase of govemment securities from the public by the Fed will cause A. commercial bank reserves to decrease. B. the money supply to increase. C. demand deposits to decrease. D. the interest rate to increase. 15. Contractionary fiscal policy is so named because it: A. involves a contraction of the nation's money supply B. necessarily reduces the size of government. C. is aimed at reducing aggregate demand and thus achieving price stability. D. is expressly designed to contract real GDP ere si ecamy l pamimnat Codi hemandcure rightward b $40 blin b A. increasing government spending by $4 billion. B. increasing government spending by $40 billion. C. decreasing taxes by $4 billion. D. increasing taxes by $4 billion. 17. If the MPC in an economy is.8, government cou A. increasing government spending by $25 billion. B. increasing government spending by $80 billion. C. decreasing taxes by $25 billion. D. decreasing taxes by $100 billion. ld shift the aggregate demand curve rightward by $100 billion by

Explanation / Answer

1. fiscal policy is so named because it: ...(A) Expansionary fiscal policy is so named because it: A) involves an expansion of the nation's money supply.

2. The desire to hold money for transactions purposes arises because (D)LOw interest rates reduce th oppertunity cost of holding money

3. A firm invests in a new machine that costs $5,000 a year but which is expected to produce an increase in total revenue of $5,200 a year. The current real rate of interest is 7 percent. The firm should: (D)Not undertake the investment because the expected rate of return of 4 percent is less than the real rate of interest

4. the m1 money supply is composed of (D) chekable deposits and currency in circulation

5. If you place a part of your summer earning in a savings account, you are using money primarily as a: (B). store of value.

6. The purchase of government securities from the public by the Fed will cause:B) the money supply to increase

7. contractionary fiscal policy is so named because it (C)is aimed at reducing aggregate demand and thus achieving price stability

8. If the MPS in an economy is .1, government could shift the aggregate demand curve rightward by $40 billion by:(A)increasing government spending by $4 billion.

9. If the MPC in an economy is .8, government could shift the aggregate demand curve rightward by $100 billion by: (C)decreasing taxes by $25 billion.

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