Question 22 (1 point) Saved Figure 15-1 Interest MS Rate a 4% 3 d 2. Money Demand Quantity of Money Refer to Figure 15-1. What will happen if the current interest rate is 4 percent? People will sell more bonds, which drives the interest rates down. People will sell more bonds, which drives interest rates up. People will buy more bonds, which drives interest rates up. O People will buy more bonds, which drives interest rates down.Question 23 [1 point] J Saved How does a stock market boom affect household spending, and how would the Bank of Canada offset the effects on the price level and real GDP? 0 household spending decreases; the Bank of Canada would increase the money supply household spending increases; the Bank of Canada would decrease the money sup-plyr 0 household spending decreases; the Bank of Canada would decrease the money supply 0 houslehold spending increases; the Bank of Canada would increase the money SUFJD Y Question 24 [1 point] v' Saved Assuming no crowding-out. investment-accelerator, or multiplier effects, how will a $100 billion increase in government expenditures shift aggregate demand? 6) It will shift aggregate demand right by $100 billion. 0 It will shift aggregate demand right by more than $100 billion. 0 It will shift aggregate demand left by more than $100 billion. 0 It will shift aggregate demand right by less than $100 billion. Question 25 (1 point} J Saved What are the effects of a change in taxes on consumption and aggregate demand? 6) If taxes increase. consumption decreases and aggregate demand shifts left. 0 If taxes increase. consumption increases and aggregate demand shifts right. 0 If taxes decrease, consumption increases and aggregate demand shifts left. 0 If taxes decrease, consumption decreases and aggregate demand shifts right. Question 26(1 point} J Saved Which of the following best defines automatic stabilizers? 0 any change in taxes or government policies 0 changes in taxes or government spending that increase the lags caused by fiscal policy changes in taxes or government spending that shift aggregate demand without requiring active policies changes in taxes or government spending that policymakers quicklv agree to implement Question 27 (1 point} ~/ Saved Which statement best describes the outcomes of a decrease in the reserve requirement in a fractional reserve system? Q The money multiplier decreases, but the money supply increases. 0 The money multiplier increases. but the money supply decreases. 6) Both the money multiplier and the money supply increase. 0 Both the money multiplier and the money supply decrease. Question 23 (1 point} ~/ Saved According to the quantity equation, if P = 3 and Y = 400. which of the following pairs could M and V be? Question 29 [1 point] J Saved The economy is in long-run equilibrium. Suddenly, due to improved international relations, a boom experienced by a major trading partner, and the increased confidence of policymakers, citizens. Refer to the Scenario 11-1. What is predicted by the aggregate demand and aggregate supply theory? 0 The expected inflation rises. Workers bargain for lower increases in wages. O The expected inflation falls. Workers bargain for higher increases in wages. The expected inflation rises. Workers bargain for higher increases in wages. O The expected inflation falls. Workers bargain for lower increases in wages. Question 30(1 point] v' Saved How does the aggregate demand and aggregate supply model reflect a rise in wage rates? 0 The aggregate-demand curve shifts to the left. 0 The aggregate-demand curve shifts to the right. 6) The short-run aggregate-supply curve shifts to the left. 0 The short-run aggregate-supply curve shifts to the right. Question 31 (1 point} J Saved If the MPC is 0.6, the MPI is 0.2, and the government increases spending by $50 million. what will be the demand for goods and services generated by this increase? 6) $125 million 0 $250 million 0 $30 million 0 $40 million Question 32 (1 point} J Saved A city decides to build a new soccer stadium. The owner of the construction company that builds the new stadium pays their workers. The workers increase their spending. Firms that the workers buy goods from increase their output. What does this type of effect on spending illustrate? O the crowding-out effect 6) the multiplier effect 0 the Fisher effect 0 the liquidity preference effect Question 33 (1 point} J Saved Fiscal Policy has its own strengths and weaknesses as a policy tool. Its identified weakness is: O Expansionary measures can result to high fiscal deficits. 0 It has uncertain effects on Aggregate Demand once implemented. 0 It has uncertain effects on Aggregate Supply once implemented. 6) None of the above. Question 34 (1 point} J Saved Monetary Policy has its own strengths and weaknesses as a policy instrument. Its identified strength in the implementation of policy is: 6) It can be done quickly 0 The players of the financial system immediately lend to companies if needed. 0 It does not affect interest rates 0 None of the above. Question 35 (1 point} J Saved Why does the Supply and Demand for Money Graph usually show the Money Supply Curve as vertical? 6) The quantity of Money is assumed fixed by the Central Bank. 0 Money Supply Curve is highly elastic. O The effect of inflation on Money Supply. 0 None of the above Question 36(1 point} J Saved An expansionary Fiscal Policy is understood to shift the Aggregate Demand Curve and is classified as: 0 Changes in Consumption 0 Changes in Investment 6) Changes in Government Purchases 0 Changes in Net Exports Question 21 (1 point} ~/ Saved According to liquidity-preference theory, in which circumstance would the money- supply curve shift left? 0 if government spending decreased 0 if the price level increased 0 if the interest rate increased 6) only if the Bank of Canada chose to decrease the money supply Question loll point] v' Saved Which statement characterizes the long-run Phillips curve? 6) Its position depends on the natural rate of unemployment. 0 If it shifts right, long-run aggregate supply shifts right. 0 Its position is determined primarily by monetary factors. 0 It cannot be changed by any government policy. Question 17(1 point] v' Saved Which government action will shift the aggregate demand left? 0 decreases in highway construction 0 introduction of an investment tax credit 6) a rise in personal income taxes 0 the purchase of new Coast Guard ships Question 13 [1 point] v' Saved What happens to aggregate demand if people want to save more for retirement and the government raises taxes? 6) Aggregate demand shifts left. 0 If people save more. aggregate demand shifts right; if the government raises taxes. aggregate demand shifts left. 0 If people save more. aggregate demand shifts left; if the government raises taxes. aggregate demand shifts right. vvnen would the long-run aggregate-supply curve snift right? when immigration decreases or the government abolishes the minimum wage when immigration increases or the government makes a substantial increase in the minimum wage when immigration decreases or the government makes a substantial increase in the minimum wage when immigration increases or the government abolishes the minimum wage Question 20 (1 point) Saved According to the sticky-wage theory, which statement is consistent with an unexpected fall in the price level? The real wage falls and employment rises. The real wage rises and employment rises. . The real wage falls and employment falls. The real wage rises and employment falls. Question 21 (1 point) Saved According to liquidity-preference theory, in which circumstance would the money- supply curve shift left? if government spending decreased if the price level increased if the interest rate increased only if the Rank of Canada choco to darronco tho mAnov cunAlyQuestion 37 (1 point] v' Saved We know the Crowding Out Effect on Investments is taking place when E)u:pansionar',f Fiscal Policy primarily: O Decreases interest rate 6) Increases interest rate 0 increases unemployment rate 0 None of the above Question 33 (1 point] v' Saved The Phillips Curve is a curve that shows the short-run tradeoff between: 0 Inflation and GDP 0 GDP and exchange rate 6) Inflation and unemployment 0 None of the above Question 39 (1 point] v' Saved It is a core belief of Monetary Policy that to reduce inflation, the Central Bank needs to implement: Expansionary Policy 0 Contractionary Policy 0 Neutral Policy 0 All of the above Question 40 [1 point] J Saved The most important reason for the downward slope of the Aggregate Demand Curve: 0 The Wealth Effect 6) The Interest Rate Effect 0 The Real Exchange Rate Effect 0 All of the Above