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ECO multiple choice questions

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Question;Question;1.1.Which;of the following is an example of discretionary fiscal policy? (Points: 3);an increase in unemployment;insurance payments during a recession;an increase in income tax;receipts with rising income during an expansion;the tax cuts passed by Congress;in 2001 to combat the recession;a decrease in food stamps;issued during an expansion or boom;Question;2.2.The;majority of dollars spent by government prior to the Great Depression was;spending at the ________ level. In the post World War II;period, two-thirds to three quarters of all dollars spent by government in;the United States are spent at the ________ level (Points: 3);federal, state and local;state and local, federal;state and local, state;local, state;Question;3.3.The;fastest growing category of government expenditure is(Points: 3);grants to state and local;governments.;defense spending.;transfer payments.;government purchases.;4.;Year;Potential;Real GDP;Real;GDP;Price;Level;2013;$14.0;trillion;$14.0;trillion;150;2014;14.5 trillion;14.8 trillion;154;Consider the hypothetical information in the;table above for potential real GDP, real GDP and the price level in 2013;and in 2014 if the Congress and the president do not use fiscal policy. If;the Congress and the president want to keep real GDP at its potential level;in 2014, they should;(Points;3);buy Treasury securities.;conduct expansionary fiscal;policy.;decrease government purchases.;decrease the discount rate.;5.A permanent tax cut would;likely ________ consumption spending ________ than would a tax rebate like;the one issued in 2008.(Points;3);increase, more;increase, less;decrease, more;decrease, less;6.if government spending and;the price level increase, then (Points;3);the interest rate increases;consumption declines, and investment spending declines.;the interest rate decreases;consumption declines, and investment spending declines.;the interest rate increases;consumption increases, and investment spending increases.;the interest rate decreases;consumption increases, and investment spending increases.;7.During recessions, government;expenditure automatically (Points;3);falls because of programs such;as unemployment insurance and Medicaid.;rises because of programs such;as unemployment insurance and Medicaid.;falls because of the;progressive income tax system.;rises because of the;progressive income tax system.;8.According to the short-run;Phillips curve, the unemployment rate and the inflation rate are (Points: 3);unrelated.;positively related.;negatively related.;unaffected by monetary policy.;9.What is the natural rate of;unemployment? (Points;3);the unemployment rate that;exists when the economy is at potential GDP;the unemployment rate that;exists when the economy is at a trough in a business cycle;an unemployment rate of 0%;any unemployment rate that is;above the inflation rate;10.What impact does monetary;policy have on the long-run Phillips curve? (Points: 3);Monetary policy can only shift;the long-run Phillips curve to the left.;Monetary policy shifts the;long-run Phillips curve to the right or left, depending on whether monetary;policy is expansionary or contractionary.;Monetary policy can only shift;the long-run Phillips curve to the right.;Monetary policy has no impact;on the long-run Phillips curve.;11.In the long run, the Federal;Reserve can control which of the following? (Points: 3);the inflation rate;the unemployment rate;the growth rate of real GDP in;the economy;the natural rate of unemployment;12.Contractionary monetary;policy will result in(Points;3);higher interest rates.;increased rates of inflation.;an upward shift in the;short-run Phillips curve.;a leftward shift in the;long-run Phillips curve.;13.If the Federal Reserve;announces that its target for the federal funds rate is rising from 4;percent to 4.25 percent, how do you expect workers and firms to react? (Points: 3);As long as the Fed's;announcement is credible, workers and firms will increase their consumption;and investment spending, which will increase aggregate demand and inflation.;As long as the Fed's;announcement is credible, workers and firms will reduce their consumption and;investment spending, which will reduce aggregate demand and reduce inflation.;If the Fed's announcement is;not credible, workers and firms will not expect inflation to fall so they;will reduce their consumption and investment spending, which will increase;aggregate demand and reduce inflation.;Workers and firms will;incorporate the increase in interest rates into their expectations of;inflation, and they will expect inflation to rise as a result of Fed's policy;announcement.;14.If the Fed decided to reverse;its policy actions implemented during the heart of the last recession, the;Fed would be acting to try to prevent (Points: 3);a decrease in unemployment.;an increase in unemployment.;an increase in deflation.;an increase in inflation.;15.;If foreign holdings of U.S. dollars increase;holding all else constant;(Points;3);If foreign holdings of U.S. dollars increase, holding all else;constant;the balance on the U.S. current;account will increase.;the balance on the U.S. capital;account will increase.;the U.S. balance of trade will;increase.;16.The balance of trade includes;trade in (Points: 3);goods only.;services only.;both goods and services.;neither goods not services.;17.Currency traders expect the;value of the dollar to fall. What effect will this have on the demand;for dollars and the supply of dollars in the foreign exchange market?(Points: 3);Demand for dollars will;increase, and supply of dollars will decrease.;Demand for dollars will increase, and supply of dollars will increase.;Demand for dollars will;decrease, and supply of dollars will increase.;Demand for dollars will;decrease, and supply of dollars will decrease.;18.What impact might an increase;in the budget deficit have on interest rates and exchange rates? (Points: 4);Interest rates and exchange;rates increase.;Interest rates increase and;exchange rates decrease.;Interest rates decrease and;exchange rates increase.;Interest rates and exchange;rates decrease.

 

Paper#55890 | Written in 18-Jul-2015

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