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ch23 - Chapter23 MULTIPLECHOICE 1 a aggregatedemandonly b...

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Chapter 23 Five Debates over Macroeconomic Policy MULTIPLE CHOICE 1. Fluctuations in employment and output result from changes in a. aggregate demand only. b. aggregate supply only. c. aggregate demand and aggregate supply. d. neither aggregate demand nor aggregate supply. ANSWER: c. aggregate demand and aggregate supply. TYPE: M DIFFICULTY: 1 SECTION: 23.1 2. In the fall of 2002, consumers indicated that they were less optimistic about the future of the economy. This change in sentiment  would likely 3. “Leaning against the wind” is exemplified by a(n) 4. If firms were faced with greater uncertainty because of concern that oil prices might rise, they might decrease expenditures on  capital. In response to this change, someone who advocated “lean against the wind” policies might advocate decreasing 5. Those who desire that policymakers stabilize the economy would advocate which of the following when aggregate demand is  insufficient to ensure full employment? a. decrease the money supply b. decrease taxes c. decrease government expenditures d. None of the above is correct. ANSWER: b. decrease taxes TYPE: M DIFFICULTY: 1 SECTION: 23.1 107
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108 Chapter 23/Five Debates over Macroeconomic Policy 6. Suppose aggregate demand fell. In order to stabilize the economy, the government might
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