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A recessionary gap can best be described as the amount by which: A:injections exceed withdrawals at the level of potential output. B:equilibrium output falls short
- A "recessionary gap" can best be described as the amount by which: A:injections exceed withdrawals at the level of potential output. B:equilibrium output falls short of potential output. C:equilibrium output exceeds potential output. D: real expenditures exceed potential output.
- Aggregate supply factors: A:are consumption, investment, government, and net export spending. B:include input prices and productivity. C:explain why real output and the price level are directly related. D:explain the shape of the aggregate supply curve.
- An "inflationary gap" can best be described as the amount by which: A: real expenditures fall short of potential output. B:withdrawals exceed injections at the level of potential output. C: real expenditures exceed any given level of real output. D:equilibrium output exceeds potential output.
- An increase in government purchases may:A:do all of the above. B: increase real output and employment. C:shift the aggregate demand curve leftward. D:decrease real output.
- Assume that the economy is operating below its potential output. Under these conditions, government fiscal policy should be directed toward a(n): A: decrease in government purchases and/or tax increases. B: increase in both government purchases and taxes. C:decrease in both government purchases and taxes. D:increase in government purchases and/or tax cuts.
- Categories of Fiscal policy include: A:None of the above. B:Discretionary and Contractionary. C:Discretionary and Personal. D:Discretionary and Countercyclical
- Discretionary Fiscal Policy is described as: A:budget surplus spending (spending < revenues) to ease the pressures of aggregate demand during inflationary peaks of the business cycle. B:budget deficit spending (spending > revenue) to support aggregate demand, output and employment during recessions. C:all of the above is discretionary fiscal policy. D:a deliberate government plan to alter spending and/or taxation policies in order to influence output and employment.
- During an economic expansion: A:households and businesses spend more due to growing optimism about the future. B:the aggregate demand curve shifts leftward. C:exports tend to decrease. D:households and businesses spend less due to growing pessimism about the future
- Fiscal policy refers to: A: the authority that the Prime Minister has to change personal income tax rates. B: changes in government purchases or taxes that has the effect of destabilizing the economy. C: changes in taxes and government purchases made by legislation for the purpose of stabilizing the economy. D:the changes in taxes and transfers that occur as output changes.
- If a person writes a cheque on a Saskatoon bank to purchase a new car, he or she is employing money as: A: a measure of value. B:a means of exchange. C:a store of purchasing power. D:all of the above.
- If aggregate demand increases and aggregate supply decreases, the price level:A: and real output will both decrease. B:and real output will both increase. C:will decrease, but real output may either increase or decrease. D: will increase, but real output may either increase or decrease.
- If chartered banks lower their reserve ratio: A:the size of the money multiplier will increase. B:none of the others will occur. C:they will be prompted to reduce their lending. D:the actual cash reserves of the chartered banks will increase
- If the federal government attempts to eliminate a budget deficit during a depression, these efforts will: A:reduce the severity of the depression. B:contribute to inflation. C:shift the investment demand curve to the right. D:intensify the depression.
- If the quantity of money demanded exceeds the money supply, it can be expected that the: A:interest rate will rise. B:interest rate will fall. C: money demand curve will shift leftward. D:money supply curve will shift rightward.
- If the reserve ratio is 5 percent, then the money multiplier for the banking system will be: A:5. B:20. C:1/20. D:1/5
- If you are estimating your total expenses for school next year, you are using money as:A:a store of purchasing power. B:a measure of value. C: all of the above. D:a means of exchange.
- If you place a part of your summer earnings as cash in a safety deposit box, you are employing money as: A:a store of purchasing power. B:a measure of value. C: all of the above. D:a means of exchange.
- In any economy: A:taxes and saving are leakages, while investment and government purchases are injections. B:government purchases and saving are injections, while investment and taxes are leakages. C:taxes and government purchases are leakages, while investment and saving are injections. D:taxes and investment are injections, while saving and government purchases are leakages.
- In Canada, the M1 definition of the money supply is composed of: A:currency outside chartered banks and publicly held demand deposits at chartered banks. B:currency outside chartered banks and all notice deposits at both chartered banks and near banks. C:currency outside chartered banks and notice deposits at chartered banks. D:all currency and demand deposits at chartered banks.
- In terms of problems with Fiscal Policy, a "recognition lag" is:A: the timely "decision" to be made once a problem has been realized by economists. B: the variation in economic conditions from region to region. C:the delay between problems and its ramifications. D:the time a policy has been approved and the time it takes to have an affect.
- Money functions as: A:a store of purchasing power. B:all of the above. C:a measure of value. D: a means of exchange
- Objectives of the Bank of Canada include all of the following EXCEPT:A: to control and protect the value of the Canadian Dollar.B:to issue all currency to financial institutions and consumers. C:to promote the economic and financial welfare of Canada. D:to regulate credit and currency in the best interests of economic life of the nation.
- The aggregate demand curve: A:shows the amount of real output that will be purchased at each possible price level. B:.is downward-sloping, because a higher price level makes production more profitable. C:shows the amount of real output that will be produced at each possible price level. D:is upward-sloping, because a higher price level makes production more profitable.
- The difference between M1 and M2 is that the:A:latter includes cash held by chartered banks. B:former includes notice deposits at chartered banks. C:latter includes government bonds. D:latter includes notice and personal term deposits at chartered banks.
- The effect of an increase in personal tax rates is to: A: increase the dollar amounts of consumption and saving at each level of real output and to increase the size of the spending multiplier. B:decrease the dollar amounts of consumption and saving at each level of real output, but not to change the size of the spending multiplier. C:decrease the dollar amounts of consumption and saving at each level of real output and increase the size of the spending multiplier. D:decrease the dollar amounts of consumption and saving at each level of real output and to reduce the size of the spending multiplier.
- The factors that affect the amounts that consumers, businesses, government, and foreigners wish to purchase at each price level are the: A:sole determinants of personal income. B:aggregate supply factors. C:aggregate demand factors. D: sole determinants of the equilibrium price level and equilibrium real output.
- The multiplier effect means that: A:an increase in spending can cause aggregate demand to change by a larger amount. B:an increase in consumption can precipitate a larger increase in government purchases. C:consumption is typically several times larger than withdrawals. D: a small decline in MPC can cause aggregate demand to rise by several times that amount.
- The spending multiplier is calculated using the formula: A:1 / MPW. B: (1 - MPW) / MPC. C:(1 - MPC) / MPW. D: 1 / MPC
- Which of the following would not shift the aggregate supply curve? A:a decline in business taxes. B:a decline in the price of imported oil. C: an increase in the price level. D:an increase in labour productivity
- Which one of the following would not shift the aggregate demand curve? A:an increase in personal income tax rates. B:a depreciation of the international value of the Canadian dollar. C:a decline in the interest rate at each possible price level. D:a change in the price level.
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