Question 7:

If businesses are confident about anincrease in demand for their products, they will

Select the correct answer below:

a) expand production and reduce investment spending

b) expand production and investment spending

c) reduce production and investment spending

d) reduceproduction and expand investment spending

Question 8:

Which of the following would cause a decrease in consumption?

Select all that apply:

news about a war between Syria and Iraq

a booming stock market

the government talking about an increase in taxes needed to bridge the gap in the federal deficit

a threat of a trade war between our country and our closest trading partners

Question 11:

Suppose that a country's economy is operating at an unemployment rate 6% higher than its natural rate of unemployment. Then a(n) __________ exists and government should _________.

Select the correct answer below:

a) inflationary gap; increase spending

b) inflationary gap; decrease spending

c) recessionary gap; increase spending

d) recessionary gap; decreasespending

Question 12:

Which of the following is an appropriate fiscal policy response to accelerating inflation during an economic boom?

Select the correct answer below:

a) increase in taxes

b) increase in government spending

c) government selling bonds

d) raising the interest rate

Question 13:

The long run aggregate supply curve isvertical because ____________________.

Select the correct answer below:

a) there are limits to the quantity and quality of resources within an economy at any given time

b) there are infinite resources within an economy

c) there is no unemployment in the long run

d) the price level is constant

Question 24:

A lender of last resort isan institution that _________________________.

Select the correct answer below:

a) provides short-term emergency loans in conditions of financial crisis.

b) provides loans to banks that meet its strict lending standards regardless of the situation

c) provides long-term loans to banks, businesses, and the government for development projects

d) is there to help the government when it needs money urgently

Question 26:

Which of the following actions by the Fed will decrease the Federal Fund rate and increase the money supply?

Select the correct answer below:

a) The Fed buys US government securities

b) The Fed sells US government securities

c) The Fed raises the discount rate

d) The Fed lowers the discount rate