If policy makers desire a $30 increase in output and the consumption function is C = 100 + .75(Y-T), then they must a. increase government spending by $8. b. increase taxes by $10. c. cut government spending and taxes by $10. d. decrease taxes by $10. ANSWER C
Date: September 10th, 2020
In the Solow model, which of the following is an endogenous variable? A) output per worker B) government spending C) the saving rate D) the depreciation rate ANSWER A
Date: September 10th, 2020
The government budget constraint says that ________. A) the difference between spending and revenues must equal the amount of new bond issues B) increases in spending must be matched by increases in revenue C) interest on government debt must be paid before tax revenues are spent on goods and services or disbursed as transfer payments […]
Date: September 10th, 2020
Which of the following are endogenous variables within the classical model? a. output b. technology c. quantity of money d. level of capital e. a, b, and d ANSWER A
Date: September 10th, 2020
If Md = 1,000 – 400r and Ms = 2,000, the MPC = .85, G=100, and T = 120, then the equilibrium interest rate is a. 2.5 b. 5 c. 10 d. 20 e. not enough information was given. ANSWER A
Date: September 10th, 2020
If velocity is highly unstable, then targeting the money supply a. will be effective in stabilizing the LM curve and interest rates. b. has the same effects as targeting interest rates. c. will be ineffective in stabilizing aggregate demand. d. none of the above. ANSWER C
Date: September 10th, 2020
What is the formula for the government budget deficit? Why might it be appropriate for most governments, most of the time, to have a deficit (rather than surplus)? What will be an ideal response? ANSWER Deficit = spending – tax revenues. Presuming that government spending in some way serves the public interest, it is […]
Date: September 10th, 2020
In a move to increase its openness, the Fed has consistently increased the amount of information available to the public. According to the new classical model, the Phillips curve the Fed faces should become more: a. horizontal. b. very steep. c. vertical. d. unstable. ANSWER C
Date: September 10th, 2020
Which is a good example of an increase in total factor productivity? A) a tax cut B) good weather C) a company reducing its workforce D) better credit conditions ANSWER B
Date: September 10th, 2020
In the classical model, the factors determining output and employment are the factors that ascertain the position(s) of a. the labor supply curve only. b. the labor demand curve only. c. the aggregate production function. d. both the labor supply curve and the labor demand curve. e. Both c and d ANSWER E
Date: September 10th, 2020
