ec 201 exam - 1. Suppose the price level is fixed, the MPC...

Info iconThis preview shows pages 1–6. Sign up to view the full content.

View Full Document Right Arrow Icon
1. Suppose the price level is fixed, the MPC is .5, and the GDP gap is a negative $80 billion. To achieve full-employment output (exactly), government should: Student Response Value Correct Answer Feedback D. reduce taxes by $80 billion. 2. In a certain year the aggregate amount demanded at the existing price level consists of $100 billion of consumption, $40 billion of investment, $10 billion of net exports, and $20 billion of government purchases. Full-employment GDP is $200 billion. To obtain full employment under these conditions the government should: Student Response Value Correct Answer Feedback C. reduce tax rates and/or increase government spending. 100%
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
4. Suppose the price level is fixed, the MPC is .8, and the GDP gap is a negative $320 billion. To achieve full-employment output (exactly), government should: Student Response Value Correct Answer Feedback D. reduce taxes by $80 billion. 5. In a certain year the aggregate amount demanded at the existing price level consists of $100 billion of consumption, $40 billion of investment, $10 billion of net exports, and $20 billion of government purchases. Full-employment GDP is $120 billion. To obtain price level stability under these conditions the government should: Student Response Value Correct Answer Feedback A. increase tax rates and/or reduce government spending. 100% 6. Discretionary fiscal policy refers to: Student Response Value Correct Answer Feedback A. any change in government spending or taxes that destabilizes the economy. B. the authority that the
Background image of page 2
Student Response Value Correct Answer Feedback President has to change personal income tax rates. C. changes in taxes and government expenditures made by Congress to stabilize the economy. 100% D. the changes in taxes and transfers that occur as GDP changes. Score: 1/1 7. Contractionary fiscal policy is so named because it: Student Response Value Correct Answer Feedback A. involves a contraction of the nation's money supply. B. necessarily reduces the size of government. C. is aimed at reducing 100%
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Student Response Value Correct Answer Feedback aggregate demand and thus achieving price stability. D. is expressly designed to contract real GDP. Score: 1/1 8. A contractionary fiscal policy is shown as a: Student Response Value Correct Answer Feedback A. rightward shift in the economy's aggregate demand curve. B. rightward shift in the economy's aggregate supply curve. C. movement along an existing aggregate demand curve. D. leftward shift in the economy's aggregate 100%
Background image of page 4
Response Value Correct Answer Feedback demand curve. Score: 1/1 9. If the MPS in an economy is .1, government could shift the aggregate demand curve rightward by $40 billion by: Student Response Value Correct Answer Feedback A. increasing government spending by $4 billion. 100%
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 6
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 26

ec 201 exam - 1. Suppose the price level is fixed, the MPC...

This preview shows document pages 1 - 6. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online