The country of Littleton has total printed currency of $100 and banks have a reserve
ratio of 5%.
What is the total money supply in Littleton?
A. $5
B. $100
C. $500
D. $2000
Give this one a try later!
6. D At a reserve ratio of 10%, 𝑀𝑜𝑛𝑒𝑦 𝑀𝑢𝑙𝑡𝑖𝑝𝑙𝑖𝑒𝑟 = !
"#$#"%# "'()* = !
+.+- = 20. Total money
supply is $100 × 20 = $2,000
Which of the following is an example of an automatic stabilizer in fiscal policy?
A. Unemployment benefit payments are higher during a recession
, B. Social security taxes are regressive, so they provide contractionary fiscal policy
during a
recession
C. Inflation is lower during a recession, so money is more valuable
D. During a period of high inflation, real wages increase, which causes the aggregate
supply curve
to shift left
Give this one a try later!
A
Automatic stabilizer refers to expansionary fiscal policy when the economy
contracts and contractionary fiscal policy when the economy expands.
Option A - unemployment benefit is one of the government transfers.
Higher transfer during recession is an automatic stabilizer.
Option B - contractionary fiscal policy during a recession does not smooth
out the business cycle, so it is not an example of automatic stabilizer.
Option C - not relevant to fiscal policies.
Option D - not relevant to fiscal policies.
According to what we learned in class about fiscal policy, which of the following
statements is true?
A. An increase in G and an increase in T will both increase GDP
B. An increase in G and a decrease in T will both increase GDP
C. A decrease in G and an increase in T will both increase GDP
D. A decrease in G and a decrease in T will both increase GDP
Give this one a try later!
B
Because the output Y = C + I + G + NX, an increase in G will increase GDP.
Consumption is determined by C = A + (Y - T) × MPC. A decrease in T will
increase G, thus increasing GDP
ratio of 5%.
What is the total money supply in Littleton?
A. $5
B. $100
C. $500
D. $2000
Give this one a try later!
6. D At a reserve ratio of 10%, 𝑀𝑜𝑛𝑒𝑦 𝑀𝑢𝑙𝑡𝑖𝑝𝑙𝑖𝑒𝑟 = !
"#$#"%# "'()* = !
+.+- = 20. Total money
supply is $100 × 20 = $2,000
Which of the following is an example of an automatic stabilizer in fiscal policy?
A. Unemployment benefit payments are higher during a recession
, B. Social security taxes are regressive, so they provide contractionary fiscal policy
during a
recession
C. Inflation is lower during a recession, so money is more valuable
D. During a period of high inflation, real wages increase, which causes the aggregate
supply curve
to shift left
Give this one a try later!
A
Automatic stabilizer refers to expansionary fiscal policy when the economy
contracts and contractionary fiscal policy when the economy expands.
Option A - unemployment benefit is one of the government transfers.
Higher transfer during recession is an automatic stabilizer.
Option B - contractionary fiscal policy during a recession does not smooth
out the business cycle, so it is not an example of automatic stabilizer.
Option C - not relevant to fiscal policies.
Option D - not relevant to fiscal policies.
According to what we learned in class about fiscal policy, which of the following
statements is true?
A. An increase in G and an increase in T will both increase GDP
B. An increase in G and a decrease in T will both increase GDP
C. A decrease in G and an increase in T will both increase GDP
D. A decrease in G and a decrease in T will both increase GDP
Give this one a try later!
B
Because the output Y = C + I + G + NX, an increase in G will increase GDP.
Consumption is determined by C = A + (Y - T) × MPC. A decrease in T will
increase G, thus increasing GDP
