Keynes was concerned that at macroeconomic equilibrium in a laissez faire free market economy, full employment Multiple Choice O And price stability might not continue simultaneously. O Would continue but price stability might not. O Might not continue but price stability would. O None of the choices are correct.A limitation on fiscal policy is time. Which of the following does not impact the timeliness of fiscal policy? Multiple Choice O It takes time to recognize that the economy is in trouble. O It will take time to develop a policy strategy and for Congress to pass it. Screen captur Screenshot taken Show in folder O All of these impact the timeliness of fiscal policy. O It will take time for the policy to be implemented and for the many steps in the multiplier process to unfold. O Would continue but price Mind O O Ly Copied to cDemand-pull inflation is caused by Multiple Choice O An increase in aggregate supply. O An increase in resource costs as an economy's production capacity is approached. Screen captur Screenshot taken Show in folder O An increase in inventories. O Excessive aggregate demand in relation to an economy's production capacity. O O L Copied to cAccording to Keynes, cyclical unemployment is caused by too Multiple Choice O Much aggregate demand. O Little aggregate demand. Screen captur Screenshot taken Show in folder O Much aggregate supply. O O Little aggregate supply. O O O Ly Copied to cThe components of aggregate demand are Multiple Choice O Consumption, government spending, net exports, and investment. O Consumption, exports, imports, and disposable income. Screen captur Screenshot taken Show in folder O Consumption, inventory, government spending, and disposable income. O O Exports, imports, investment, and disposable income. O L Copied to cIn Figure 10.1, suppose this economy is in equilibrium at point a and OF represents full employment output. Which of the following statements is true Multiple Choice O The economy is experiencing serious inflation problems. Screen captur O There is no GDP gap. Screenshot taken Show in folder O Inventories are accumulating. O O Inventories are falling. O Ly Copied to cFiscal policy works primarily through Multiple Choice O Shifts of the AS curve. O Shifts of the AD curve. Screen captur Screenshot taken Show in folder O The improvement of worker skills through subsidized training programs. O Shifts of both AD and AS, as a result of changes in the interest rate. O O L Copied to cThe AD shortfall is the amount of additional aggregate demand needed to achieve full employment after allowing for Multiple Choice O Multiplier effects. O Price level changes. Screen captur Screenshot taken Show in folder O Feedback effects. O O Fiscal stimulus. O O O Ly Copied to cGiven C =200 + 0.75 Yp the multiplier is Multiple Choice O 0.25. O 0.75. Screen captur Screenshot taken Show in folder O 4. O O 1.33. O hice Devil changes O L Copied to cTo eliminate an AD shortfall of $100 billion when the economy has an MPC of 0.50, the government should increase spending by Multiple Choice O $200 billion. O $100 billion. Screen captur Screenshot taken Show in folder O $50 billion. O $500 billion. O O L Copied to cIf consumers spend 90 cents out of every extra dollar received, the Multiple Choice O MPS is 0.90. O MPC is 0.90. Screen captur Screenshot taken Show in folder O Multiplier is 0.90. O Multiplier is 9. O L Copied to cGiven C = 200 + 0.75 Yp. the multiplier is Multiple Choice O 0.25. O 0.75. Screen captur Screenshot taken Show in folder O 4. O 1.33. O O O Ly Copied to cJohn Maynard Keynes argued that Multiple Choice O Macro failure is likely to occur, and it isn't likely to go away quickly. O Macro failure is unlikely to occur. Screen captur Screenshot taken Show in folder O Macro failure is likely to occur but will go away quickly. O O None of the choices are correct. O O L Copied to cAS Y PRICE LEVEL X PE Screen captur AD2 Screenshot taken Show in folder ADI I QE OF REAL GDP O O Figure 11.2 O In Figure 11.2, if the level of spending is equal to AD,, the AD shortfall would be O L Copied to cIn Figure 11.2, if the level of spending is equal to AD,, the AD shortfall would be Multiple Choice O Equal to XY. O Equal to XZ. Screen captur Screenshot taken Show in folder O Equal to YZ. O Greater than XZ. L Copied to cA recessionary gap Multiple Choice O Would cause a depletion of inventories. O Would occur if total output were less than aggregate demand. Screen captur Screenshot taken Show in folder O Is the amount by which the rate of actual spending falls short of full-employment GDP. O O Is the amount by which total spending exceeds GDP. O L Copied to cAS P PRICE LEVEL P AD AD Q , Q, REAL OUTPUT ($ billions per year) Figure 10.1 In Figure 10.1, which of the following could cause a shift from ADo to AD,, ceteris paribus? Multiple Choice O An increase in consumer confidence.In Figure 10.1, which of the following could cause a shift from ADo to AD,, ceteris paribus? Multiple Choice O An increase in consumer confidence. O A decrease in interest rates. Screen captur Screenshot taken Show in folder O A decrease in government spending on the education. PRICE UIVIL O An increase in exports. SEAL OUTPUT In lique Il which of the 5 wing cous L Copied to cA tax cut Multiple Choice O Directly decreases the disposable income of consumers. O Contains less fiscal stimulus than an increase in government spending of the same size. Screen captur Screenshot taken Show in folder O Shifts the AD curve to the left. in figure Mid, which of the bok O Indirectly increases the disposable income of consumers. O O L Copied to cAS AD, AD, AD, (average price) Price Level C PE b 5.8 6.0 6.2 QF Real Output (trillions of dollars per year) Figure 11.1 Refer to Figure 11.1. Assume aggregate demand is represented by AD, and full employment output is $6.0 trillion. The equilibrium level of income is Multiple ChoiceRefer to Figure 11.1. Assume aggregate demand is represented by AD, and full employment output is $6.0 trillion. The equilibrium level of income is Multiple Choice O $5.0 trillion. O $5.8 trillion. Screen captur Screenshot taken Show in folder O $6.0 trillion. O $6.2 billion. Figure II.1 L Copied to cAutomatic stabilizers tend to stabilize the level of economic activity because they Multiple Choice O Are changed quickly by Congress. O Increase the size of the multiplier. Screen captur Screenshot taken Show in folder O Increase spending during recessions and reduce spending during inflationary periods. O Control the rate of change in prices. O L Copied to cThe basic money supply or M1 includes Multiple Choice O Currency in circulation, transactions accounts, and traveler's checks. O Currency in circulation, transactions accounts, and savings accounts. Screen captur Screenshot taken Show in folder O Currency in circulation, transactions accounts, traveler's checks, and money market mutual funds. O O Are changed quickly by Cong Currency in circulation, savings accounts, and credit card balances. O O O Ly Copied to cSuppose Megan withdraws $75 from her savings account and deposits it into her checking account. This transaction causes M1 to Multiple Choice O Increase by $75 and M2 to remain the same. O Decrease by $75 and M2 to remain the same. Screen captur Screenshot taken Show in folder O Increase by $75 and M2 to decrease by $75. Multiple Choice O O Remain the same and M2 to increase by $75. O O O Ly Copied to cIf total reserves for a bank are $12,000, excess reserves are $2,000, and demand deposits are $100,000, the money multiplier must be Multiple Choice O 20. O 15. Screen captur Screenshot taken Show in folder O 10. 5. O O O O L Copied to cOne of the major functions performed by the Federal Reserve district banks is Multiple Choice O Providing loans to private banks. O Providing loans to hopeful start-ups. Screen captur Screenshot taken Show in folder O Underwriting bank stock issuances. O O Buying and selling bank shares. O . L Copied to cThe national debt Multiple Choice O Is paid off each fiscal year when the debt is refinanced. O Will never be paid off in any given year, but it will be entirely paid off when it is refinanced over a number of years. Screen captur Screenshot taken Show in folder O Will be paid off when the budget is finally balanced. O O Equals the dollar amount of outstanding U.S. Treasury bonds. O Ly Copied to cIn contrast to the structural deficit, the cyclical deficit reflects Multiple Choice O Fluctuations in economic activity. O Fiscal policy decisions. Screen captur Screenshot taken Show in folder O Changes in discretionary fiscal policy. O O Changes in the "full-employment" deficit. O O O L Copied to c