ECON 2100 -- Ch11: with
complete verified solutions
Which of the following did classical economists believe caused depressions
and high unemployment? - answer All answers are correct: wars, tax
increases, poor crop growing seasons, changing tastes
T/F The one-time tax cuts used by the Bush administration to stimulate the
economy in 2008 proved to be very successful. - answer False
T/F A decrease in government purchases can close an expansionary gap by
shifting the aggregate demand curve. - answer True
According to classical economists, government intervention is - answer Not
necessary to maintain full employment
Which of the following government policies would increase aggregate
demand? - answer A deficit in the government budget
Fiscal policy - answer Uses the federal government's powers of spending and
taxation to affect employment, the price level, and GDP
Which of the following is not a tool of fiscal policy? - answer Money supply
T/F Discretionary fiscal policy works by shifting the short-run aggregate
SUPPLY curve. - answer False
According to Keynesian theory, the natural forces in the economy may not
quickly move the economy toward potential real GDP. - answer True
, Keynes thought that one macroeconomic problem is that - answer The
equilibrium level of output can fall below the potential level
The goal of fiscal policy after the Great Depression was to - answer Influence
aggregate demand
To close a contractionary gap using fiscal policy, the government can -
answer Increase government spending by less than the size of the gap
By how much would government purchases have to change if the
government wanted to increase income by $1,000 and the MPC were 0.9? -
answer $100
An increase in the federal budget deficit - answer Raises the equilibrium level
of output and employment
Government transfer payments are a good example of an automatic
stabilizer. - answer True
The Golden Age of fiscal policy was during - answer 1960s
The effect of automatic stabilizers on the business cycle is to - answer Make
both upswings and downswings smaller
Lags in the approval and implementation of fiscal policy - answer Weaken
fiscal policy as a tool of economic stabilization
Economists and policy makers questioned the effectiveness of discretionary
fiscal policy during the 1970s for all the following reasons except - answer
The problems of inflation and unemployment were basically solved
complete verified solutions
Which of the following did classical economists believe caused depressions
and high unemployment? - answer All answers are correct: wars, tax
increases, poor crop growing seasons, changing tastes
T/F The one-time tax cuts used by the Bush administration to stimulate the
economy in 2008 proved to be very successful. - answer False
T/F A decrease in government purchases can close an expansionary gap by
shifting the aggregate demand curve. - answer True
According to classical economists, government intervention is - answer Not
necessary to maintain full employment
Which of the following government policies would increase aggregate
demand? - answer A deficit in the government budget
Fiscal policy - answer Uses the federal government's powers of spending and
taxation to affect employment, the price level, and GDP
Which of the following is not a tool of fiscal policy? - answer Money supply
T/F Discretionary fiscal policy works by shifting the short-run aggregate
SUPPLY curve. - answer False
According to Keynesian theory, the natural forces in the economy may not
quickly move the economy toward potential real GDP. - answer True
, Keynes thought that one macroeconomic problem is that - answer The
equilibrium level of output can fall below the potential level
The goal of fiscal policy after the Great Depression was to - answer Influence
aggregate demand
To close a contractionary gap using fiscal policy, the government can -
answer Increase government spending by less than the size of the gap
By how much would government purchases have to change if the
government wanted to increase income by $1,000 and the MPC were 0.9? -
answer $100
An increase in the federal budget deficit - answer Raises the equilibrium level
of output and employment
Government transfer payments are a good example of an automatic
stabilizer. - answer True
The Golden Age of fiscal policy was during - answer 1960s
The effect of automatic stabilizers on the business cycle is to - answer Make
both upswings and downswings smaller
Lags in the approval and implementation of fiscal policy - answer Weaken
fiscal policy as a tool of economic stabilization
Economists and policy makers questioned the effectiveness of discretionary
fiscal policy during the 1970s for all the following reasons except - answer
The problems of inflation and unemployment were basically solved
