Sample Final - Multiple Choice Section (30 questions for 30...

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Multiple Choice Section (30 questions for 30 points): Answer All Questions 1. Crowding out occurs when a. increased taxes force higher levels of national saving. b. deficit spending by the government forces private investment spending to contract. c. local businesses cannot get government contracts because of the higher bids of large corporations. d. foreign investors are willing to pay higher prices for U.S. bonds than American citizens will pay. Graph 28-1 Use the figure shown for the following question. 2. Refer to Graph 28-1. When the money supply curve shifts from MS 1 to MS 2 , a. The equilibrium price level decreases. b. The opportunity cost of holding money decreases. c. The supply of money has decreased. d. The demand for goods and services will decrease. 3. A monetary contraction by the Fed a. increases interest rates and increases aggregate demand. b. increases interest rates and decreases aggregate demand. c. decreases interest rates and decreases aggregate demand. d. decreases interest rates and increases aggregate demand. Graph 32-2 For the following question, use the figure shown. 1
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4. Refer to Graph 32-2. Which of the following would cause the aggregate demand curve to shift from AD 1 to AD 2 ? a. Expansionary fiscal policy. b. A positive expenditure multiplier effect. c. Crowding out. d. A monetary expansion. Figure 9-6 5. In Figure 9-6, which segment of the aggregate supply curve has the largest multiplier effect? a. AB b. BC c. CD d. DG 6. Misery-Land is closed economy. The Central Bank of Misery-Land carries out expansionary monetary policy that lowers interest rates in the country. As a result, a. Misery-Land’s currency will appreciate. b. Misery-Land’s currency will depreciate. c. Misery-Land will experience a net capital outflow. d. Misery-Land will not experience any capital outflows. Figure 1: use this graph to answer questions 7 and 8. 2
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7. Figure 1 above shows the Keynesian cross for the United States. If the economy is currently at point K, which of the following factors could cause it to move to point N? a. Prices in the United States rise relative to prices in other countries. b. Congress passes new investment tax incentives. c. Open market sales. d. Declines in household wealth. 8. Refer to Figure 1 above. Suppose the economy is at point K and the government carries out fiscal policy to raise GDP by 400 billion and take the economy to point N. The slope of the AE function is 0.75. What is the vertical distance between AE1 and AE2? a. $200 billion. b. $400 billion. c. $100 billion. d. $10 billion. 9. Which of the following is not a demand side policy? a. Expansionary monetary policy. b. Contractionary fiscal policy. c. Expansionary fiscal policy. d.
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Sample Final - Multiple Choice Section (30 questions for 30...

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