Refer to the above diagrams suppose that government

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Financial Markets and Institutions
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Chapter 5 / Exercise 29
Financial Markets and Institutions
Madura
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53. Refer to the above diagrams. Suppose that government undertakes fiscal policy designed to increase aggregate demand from AD1to AD2and thereby to increase GDP from Xto Z. In terms of graph B, which of the following might explain why GDP increases to Yrather than toZ? A. depreciation of the dollar.B. reduction in tariffs imposed by our trading partners.C. decrease in the saving schedule.D.crowding-out effect.
Blooms: AnalyzeBlooms: ApplyDifficulty: HardLearning Objective: 12-01 Describe the impact of a change in interest rates and exchange rates on the effectiveness of fiscal policy.Topic: 12-01 Fiscal Policy in an Open Economy54. The crowding-out effect of expansionary fiscal policy suggests that:
Accessibility: Keyboard NavigationBlooms: RememberBlooms: UnderstandDifficulty: HardLearning Objective: 12-01 Describe the impact of a change in interest rates and exchange rates on the effectiveness of fiscal policy.Topic: 12-01 Fiscal Policy in an Open Economy12-24
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Financial Markets and Institutions
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Chapter 5 / Exercise 29
Financial Markets and Institutions
Madura
Expert Verified
Chapter 12 - Macroeconomic Policy Revisited55. The financing of a government deficit increases interest rates and, as a result, reduces investment spending. This statement describes:
Accessibility: Keyboard NavigationBlooms: RememberBlooms: UnderstandDifficulty: HardLearning Objective: 12-01 Describe the impact of a change in interest rates and exchange rates on the effectiveness of fiscal policy.Topic: 12-01 Fiscal Policy in an Open EconomyTrue / False Questions56. The most common way for government to fund expansionary fiscal policy is by borrowingfrom the general public.
Accessibility: Keyboard NavigationBlooms: RememberBlooms: UnderstandDifficulty: EasyLearning Objective: 12-01 Describe the impact of a change in interest rates and exchange rates on the effectiveness of fiscal policy.Topic: 12-01 Fiscal Policy in an Open Economy57. Monetary policy cannot be used effectively when a country has a fixed exchange rate.
Accessibility: Keyboard NavigationBlooms: RememberBlooms: UnderstandDifficulty: MediumLearning Objective: 12-05 Show that Canada has been successful in maintaining the internal but not the external value of the Canadian dollar and why some people call for a fixed exchange rate.Topic: 12-06 Fixed Versus Flexible Exchange Rates12-25
Chapter 12 - Macroeconomic Policy Revisited58. Expansionary fiscal policy may crowd out both private investment and export spending.
Accessibility: Keyboard NavigationBlooms: RememberBlooms: UnderstandDifficulty: EasyLearning Objective: 12-01 Describe the impact of a change in interest rates and exchange rates on the effectiveness of fiscal policy.

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