Answer 1
c) Both (a) & (b) are correct
Answer 2
c) Both (a) & (b) are correct
Answer 3
d) This investment is not profitable and should not be undertaken
Answer 4
C) shift the investment-demand curve to the right
Answer 5
B) $300
Answer 6
A)$50
Answer 7
C) Unstable because aggregate expenditures exceed GDP
Answer 8
C) FE/DE.
Answer 9
A) An increase in investment expenditures.
Answer 10
D) AB/GF.
Answer 11
D) A higher price level will decrease the real value of many financial assets and therefore reduce spending.
Answer 12
C) Rightward by $50 billion at each price level
Answer 13
A) tax cuts during recession and reductions in government spending during inflation
Answer 14
B) reducing government expenditures by $20 billion
Answer 15
B) a $10 billion increase in government spending
Answer 16
D) a $30 billion decrease in government spending
Answer 17
D) an increase of $15 billion
Answer 18
B) the stock of money is determined by the Federal Reserve System and does not change when the interest rate changes
Answer 19
B) i2.
Answer 20
D) not predict what will happen to interest rates or bond prices.
Answer 21
D) the less independent the central bank, the higher the average annual rate of inflation
Answer 22
B) provide a means by which the monetary authorities can influence the lending ability of commercial banks.
Answer 23
C) are $20,000.
Answer 24
B) 10 percent
Answer 25
D) $5,000.
Answer 26
D) $5,000.
Answer 27
D) $25,000.
Answer 28
A) the purchase of government bonds in the open market by the Federal Reserve Banks
Answer 29
D) An increase in the money supply will lower the interest rate, increase investment spending, and increase aggregate demand and GDP.
Answer 30
A)sell government securities, raise reserve requirements, and raise the discount rate
Answer 31
B) buying government securities, reducing the reserve ratio, reducing the discount rate, and a budgetary deficit.
Answer 32
A)fall
Answer 33
A)can be implemented more quickly
Answer 34
A)a tight money policy can force a contraction of the money supply, but an easy money policy may not achieve an expansion of the money supply.
Answer 35
B) investment-demand curve shifts to the left.
Answer 36
C) A decrease in the money supply will increase the interest rate and reduce the amount of money held as an asset.
Answer 37
B) both the price level and real output.
Answer 38
C) a decline in the price level.
Answer 39
A) the money supply must have been constant during the period.
Answer 40
D) all of the above are true
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