Reference no: EM132506609
1. In a certain economy, when income is $100, consumer spending is $60. The value of the multiplier for this economy is 4. It follows that, when income is $101, consumer spending is
a. $60.25.
b. $60.75.
c. $61.33.
d. $64.00.
2. Depreciation of a currency is
a. the increase in the value of one currency in terms of another.
b. the decrease in the value of one currency in terms of another.
c. an arbitrary increase in the value of a currency that had previously been fixed in value.
d. an arbitrary decrease in the value of a currency that had previously been fixed in value.
3. Consider a hypothetical economy X. This year's money supply is $500, nominal GDP is $10,000, and real GDP is $5,000. Assume that the velocity of money is constant and the economy's real output of goods and services rises by 3% each year,
find the price level next year if the central bank keeps the money supply constant.
4.Opponents of active stabilization policy
a.advocate a monetary policy designed to offset changes in the unemployment rate.
b.argue that fiscal policy is unable to change aggregate demand or aggregate supply.
c.believe that the political process creates lags in the implementation of fiscal policy.
d.None of the above are correct.
5. Which of the following policies would someone who wants the government to follow an active stabilization policy recommend when the economy is experiencing unemployment above the natural rate?
a. decrease the money supply
b. increase government expenditures
c. increase taxes
d. All of the above are correct.
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