Question 1

Fiscal policy is not effective if government borrowing __________.

Group of answer choices

drives down interest rates and crowds out private borrowers

drives up interest rates and crowds out private borrowers

drives down interest rates and increases the number of private borrowers

drives up interest rates and increases the number of private borrowers

Question 2

Some modern economists responded to supply-side economics with a politically liberal competing growth strategy known as __________ policy.

Group of answer choices

privatization

outsourcing

market force

industrial

Question 3

The money supply fell during the Great Depression because __________.

Group of answer choices

the monetary base also fell

the public held less currency, and the banks held less excess reserves

the public held more currency, and the banks held more excess reserves

the Fed did not yet exist

Question 4

The rightward shift of the AS curve produces __________.

Group of answer choices

a fall in real output and income

a rise in real output and income

negative economic growth

short-term economic growth

Question 5

Which of the following tends to reduce the effect of an expansionary open market operation on the money supply?

Group of answer choices

the sale of bonds to the Fed by banks

the sale of bonds to the Fed by the public

increases in banks' excess reserves

increases in banks' lending activity

Question 6

Monetarists believe that the Fed should emphasize controlling the size of __________.

Group of answer choices

interest rates

the money supply

the money demand

structured payments

Question 7

Of the following, which is the best definition ofmoney multiplier?

Group of answer choices

the ratio of a bank's assets to its required reserves

the ratio of the actual money supply to the monetary base

the positive difference between last year's inflation rate and this year's

the positive difference between public-held currency and bank reserves

Question 8

On which of the following policies do Keynesians and monetarists agree?

Group of answer choices

Fiscal policy is most effective in a very open economy.

Monetary policy is less effective in a very open economy.

Fiscal policy works directly through spending.

Monetary policy works indirectly through spending.

Question 9

If the government is running a deficit, and an increase in government spending is financed by higher taxes, __________.

Group of answer choices

the government will have to print more money or government bonds

the government will borrow less than it would if taxes were unchanged

it is more inflationary than if it is financed with money creation

it will not be necessary for the government to borrow

Question 10

Suppose Alan does not have full information, processes information slowly, and relies heavily on past experience to predict the future. Accordingly, Alan has __________ expectations.

Group of answer choices

rational

extrapolative

adaptive

unrealistic