ECO 336 Chapter 11 Exam | Questions and Answers with Verified Solutions |
Latest 2026 Update
Q: A common response to stop a depreciation of a currency is to use contractionary
monetary policy, which could lead to a recession.
Answer:
True
Q: Contractionary fiscal policy attempts to shift aggregate demand to the right.
Answer:
False
Q: Expansionary monetary policy is likely to lead to a depreciation of the nation's
currency.
Answer:
True
Q: Government spending and taxes
Answer:
are a major determinant of aggregate demand.
Q: Fiscal policy is
Answer:
the deliberate manipulation of taxation and spending designed to affect the
economy.
Q: Changes in aggregate demand
Answer:
could be caused by changes in the spending decisions of the
households, businesses, the government, and foreigners.
, Q: Which of the following is NOT a reason why the effects of tax cuts on government
spending dissipate and each additional change in consumption and income becomes smaller
and smaller?
Answer:
Some of the
increase is used for business investment.
Q: Intermediate inputs are
Answer:
goods purchased by one business from another to use in production.
Q: Expansionary monetary policy involves an increase in the money supply and a fall in
interest rates, leading to a positive expansion in income.
Answer:
True
Q: Along the aggregate supply curve
Answer:
the middle, upward-sloping part of the aggregate supply
curve would be associated with a growing economy that experienced increased prices from
resources
that are becoming relatively scarce.
Q: It is more certain how expansionary monetary policy will affect the current account than
how expansionary fiscal policy will affect it.
Answer:
False
Q: An example of expansionary fiscal policy would be
Answer:
an increase in government spending on
infrastructure to create jobs and improve the economy.
Latest 2026 Update
Q: A common response to stop a depreciation of a currency is to use contractionary
monetary policy, which could lead to a recession.
Answer:
True
Q: Contractionary fiscal policy attempts to shift aggregate demand to the right.
Answer:
False
Q: Expansionary monetary policy is likely to lead to a depreciation of the nation's
currency.
Answer:
True
Q: Government spending and taxes
Answer:
are a major determinant of aggregate demand.
Q: Fiscal policy is
Answer:
the deliberate manipulation of taxation and spending designed to affect the
economy.
Q: Changes in aggregate demand
Answer:
could be caused by changes in the spending decisions of the
households, businesses, the government, and foreigners.
, Q: Which of the following is NOT a reason why the effects of tax cuts on government
spending dissipate and each additional change in consumption and income becomes smaller
and smaller?
Answer:
Some of the
increase is used for business investment.
Q: Intermediate inputs are
Answer:
goods purchased by one business from another to use in production.
Q: Expansionary monetary policy involves an increase in the money supply and a fall in
interest rates, leading to a positive expansion in income.
Answer:
True
Q: Along the aggregate supply curve
Answer:
the middle, upward-sloping part of the aggregate supply
curve would be associated with a growing economy that experienced increased prices from
resources
that are becoming relatively scarce.
Q: It is more certain how expansionary monetary policy will affect the current account than
how expansionary fiscal policy will affect it.
Answer:
False
Q: An example of expansionary fiscal policy would be
Answer:
an increase in government spending on
infrastructure to create jobs and improve the economy.
