In exhibit 11 6 if the aggregate demand curve is at

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Chapter 9 / Exercise 18
Macroeconomics for Today
Tucker
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108.In Exhibit 11-6, if the aggregate demand curve is at AD1, the government should:a.raise taxes to move to AD2.b.cut taxes to move to AD2.c.cut taxes to move to AD3.d.cut spending to move to AD2.e.not change its behavior.ANS:B
PTS:1DIF:ChallengingNAT:BUSPROG: AnalyticTOP:Discretionary Fiscal PolicyKEY:Bloom's: Analysis109.In Exhibit 11-6, if the aggregate demand curve is at AD2, the government should:
PTS:1DIF:ModerateNAT:BUSPROG: AnalyticTOP:Discretionary Fiscal PolicyKEY:Bloom's: Comprehension110.In Exhibit 11-6, if the aggregate demand curve is at AD3, the government should:
PTS:1DIF:ModerateNAT:BUSPROG: AnalyticTOP:Discretionary Fiscal PolicyKEY:Bloom's: ComprehensionExhibit 11-7 Aggregate demand and supply model
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Chapter 9 / Exercise 18
Macroeconomics for Today
Tucker
Expert Verified
111.Beginning at equilibrium E1in Exhibit 11-7, assume the marginal propensity to consume (MPC) is 0.90 and the government increases taxes by $100 billion. The aggregate demand curve will shift to the:
PTS:1DIF:ChallengingNAT:BUSPROG: AnalyticTOP:Discretionary Fiscal PolicyKEY:Bloom's: Analysis112.Suppose the economy in Exhibit 11-7 is in equilibrium at point E1and the marginal propensity to consumer (MPC) is 0.75. Following Keynesian economics, to lower the price level from 170 to 150, the government should reduce its spending by:a.$20 billion.c.$133 billion.b.$100 billion.d.$400 billion.ANS:B
PTS:1DIF:ModerateNAT:BUSPROG: AnalyticTOP:Discretionary Fiscal PolicyKEY:Bloom's: Comprehension113.Suppose the economy in Exhibit 11-7 is in equilibrium at point E1and the marginal propensity to consume (MPC) is 0.75. Following Keynesian economics, to lower the price level from 170 to 150 the government should raise taxes by:
PTS:1DIF:ModerateNAT:BUSPROG: AnalyticTOP:Discretionary Fiscal PolicyKEY:Bloom's: Comprehension114.Beginning at equilibrium E1in Exhibit 11-7, suppose the marginal propensity to consume (MPC) is 0.75, and the government wishes to lower the price level form 170 to 150 while maintaining a balanced budget. The government should reduce both spending and taxes by:
PTS:1DIF:ChallengingNAT:BUSPROG: AnalyticTOP:Discretionary Fiscal PolicyKEY:Bloom's: Analysis

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