Fiscal policy aims to influence Short run aggregate supply Long run aggregate su
ID: 1208364 • Letter: F
Question
Fiscal policy aims to influence Short run aggregate supply Long run aggregate supply Aggregate demand Foreign spending The main consequence of a recession is Lower per capita GDP Lower nominal GDP Lower real GDP Cyclical unemployment If the economy is experiencing a recession and fiscal policy Is warranted, Democrats would prefer to and Republicans would prefer to Increase spending, lower taxes Decrease spending, lower taxes Hold spending constant, increase taxes Use automatic fiscal policy only, decrease taxes was the first proponent of fiscal policy Ronald Reagan Arthur Laffer Arthur Aardvark John Maynard Keynes City managers pushing investment in city projects like swimming pools that are proven to lose money rely on which economic theory to support their ideas? The marginal propensity to save The marginal propensity to consume The economic multiplier Automatic fiscal policy The higher the MPC, the the multiplier Higher Lower More effective Less effective Which of the following would encourage business to invest more? Higher interest rates Lower interest rates Contractionary fiscal policy Automatic fiscal policy If a student has a consumption function of, f(DI) = 1000+.9DI, Autonomous expenditure is $900 Autonomous expenditure is $1900 Induced Expenditure is $1000 Autonomous expenditure is $1000Explanation / Answer
17. c. Aggregate demand as fiscal policy consists of policies of government spending and taxation which affects the disposable income of the consumer.
18. d. cyclical unemployment
19. a. Increase spending, lower taxes as both will help to increase the supply of money and help to overcome recession.
20. d. John Maynard Keynes
21. c. The economic multiplier
22. a. Higher
Multiplier = 1 / (1-MPC). In this case increase in MPC decreases the denominator which leads to increase in the value of multiplier.
23. b. Lower interest rate as if business get less return on their saving then it will reduce it and try to earn more through investment.
24. d. Autonomous expenditure is $ 1,000 as autonomous expenditure does not depends upon the disposable income of the consumer i.e. DI.
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