Question # 1

Other things equal a decrease in autonomous consumption shifts the _____ curve to the

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IS ; RIGHT

IS ; Left

LM ; Left

LF ; Right

The use of money is more efficient than barter because the introduction of money

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Reduces the need for economic specialization

Reduces the need to exchange goods

Reduce the need for other stores of value

Reduces transaction costs

Monetary policy can affect output.

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this statement is always true

This statements always false

This statement is true only in the short run

This statement is true only in the medium run and the long run

An example of discretionary fiscal policy would be.

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The operation of the welfare sate

The operation of the processive federal income tax

A tax cut adopted to stimulate consumption

An interest rate out in plummeted to stimulate consumption

An item designed as money that is intrinsically worthless could the.

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A currency note

A silver coin

A barter item

Any tradeable commodity

If the Central Bank wanted to decrease the quantity of money held by the public it would.

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Sell government securities

Buy government securities

Lower the legal reserve requirement

Raise taxes

Identify the three motives of money demand.

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Accumulative

Speculative precautionary

Speculative transaction precautionary

Precautionary special trisection

Despite an expansionary monetary policy an economy experiences a recession the recession could occur in spite of the right ward shift of the LM curve if

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The IS curve shifts left ward

The IS curve shifts right ward

The money supply increase

Taxes are cut

According to classical models, the level of employment is determined primarily by

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The level of aggregate demand for goods and services

Prices and wages

Government taxation

Government spending

Aggregate output and the interest rate are ______ related to government spending and are ___ related to taxes.

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Positively ; positively

Positively ; negatively

negatively ; positively

negatively ; negatively

If the Federal reserve conducts open market __ the money supply __ shifting LM curve to the left.

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Purchases ; decreases

sales ; decreases

purchases ; increases

sales ; increases

in the Keynesian cross diagram, a decrease in investment spending because companies become more pessimistic about investment profitability causes the aggregate demand function to shift _____the equilibrium level of aggregate output to fall and the IS curve to shift to the.

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up ; left

up ; right

down ; left

down ; right

The opportunity cost of holding currency decrease when

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Income decreases

The interest rate on bonds decreases

The interest rate on money decrease wealth decrease

Wealth decreases

An increase in spending those results from expansionary _______ policy cause the interest rate to.

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fiscal ; rise

fiscal ; fall

incomes ; rise

income ; fall

The contractionary effect on private investment spending due to financing requirements of government deficit pushing up interest rates is known by this term.

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Crowding out

Recognition lag

Public sector borrowing requirement

Fiscal drag

"Rising productivity does not in itself spell the end of inflation. With enough______ it would still be possible to whip prices into a froth the blank is best filled with.

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Income growth

Unemployment

Money growth

Taxes

The real money demand doubles while the nominal money supply is unchanged what happens to the price level.

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The price level increase by a factor of four

The price level doubles

The price level is unchanged

The price level falls by one half.

Why would corporations want to achieve zero balances in their checking accounts.

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To earn more interest

To avoid paying taxes

to keep a low profile

To circumvent banking regulations

using money as a medium of exchange.

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Requires people to math goods wanted with goods available.

Reduces the range of feasible exchanges in the economy

Inhibits economic transactions

Reduces the need for barter in the economy.

When a government prints money to finance its expenditures it is likely to cause

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Unemployment

Inflation

Deflation

Reductions in the use of barter

Money is

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An indicator of the scarcity of wants

Anything that sellers accept i exchange for goods and services.

A form of barter

Anything that the government classifies as a trade commodity.

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