If the Government spends more on defense and does not decrease domestic spending, which of the following happens?

a. Decrease in price levels and Decrease in GDP

b. Increase in price levels and Increase in GDP

c. Increase in price levels and Decrease in GDP

d. Decrease in price levels and Increase in GDP

What is Fiscal Policy?

a. The use of government spending and taxation to influence economic activity

b. Measures all spending on a countries domestically produced goods

c. Measures only government spending

d. Measure only consumption spending

The aggregate demand curve does not include the demand of

a. Business' demand for capital goods

b. Government's demand for goods and services

c. Consumers' demand for foreign made goods

d. Consumer's demand for domestically made goods

When the government adopts the appropriate fiscal policy for a recession, what should happen to the government's budget?

a. more of a balanced budget

b. moves towards a budget deficit

c. less debt, but more deficits

d. moves towards a budget surplus

Which of the following actions would move the aggregate supply curve to the right?

a. Higher interest rates

b. Lower prices on imported oil

c. Destruction of capital goods

d. Increased regulations

If the aggregate demand curve moves to the right, which of the following happens?

a. Increase in price levels and Decrease in GDP

b. Decrease in price levels and Decrease in GDP

c. Decrease in price levels and Increase in GDP

d. Increase in price levels and Increase in GDP

Inflation is created when businesses decide to spend billions on new capital goods.

a. Cost-push

b. Wage-price spiral

c. Demand-pull

d. Supply-Shocks

Workers getting a pay raise can cause this type of inflation..

a. Cost-push

b. Wage-price spiral

c. Supply-Shocks

d. Demand-pull

During the expansion of the business cycle, the government should do what according to fiscal policy?

a. raise taxes and increase government spending

b. lower taxes and increase government spending

c. raise taxes and decrease government spending

d. lower taxes and decrease government spending

Increase government spending due to war results in what type of inflation?

a. cost-push

b. general inflation

c. demand-pull

d. none of the above