User Account

All Pages

Find an incorrect statement about fiscal policy instrument

Assignment Help Macroeconomics
Reference no: EM131184347

1. Which of the following statement is not true? Other things remaining the same,
(a) A fall in the price level increases both exports and imports.
(b) A rise in the price level decreases the real value of money.
(c) A fall in the price level increases the quantity of real wealth.
(d) A rise in the price level increases saving.

2. Which of the following statement is true? Other things remaining the same,
(a) A fall in the price level increases both exports and imports.
(b) A rise in the price level increases the real value of money.
(c) A fall in the price level increases the quantity of real wealth.
(d) A rise in the price level decreases saving.

3. Find an incorrect statement.
(a) The short run aggregate supply (SAS) curve slopes upward.
(b) With an inflationary gap, money wage rate begins to fall and the SAS curve shifts rightward.
(c) A leftward shift in the short run aggregate supply (SAS) curve causes stagflation.
(d) In the long run, the quantity of real GDP is equal to potential GDP.

4. Find an incorrect statement.
(a) The short run aggregate supply (SAS) curve slopes upward.
(b) With an inflationary gap, money wage rate begins to rise and the SAS curve shifts leftward.
(c) A leftward shift in the short run aggregate supply (SAS) curve causes stagflation.
(d) In the long run, the quantity of real GDP is greater than potential GDP.

5. With the given money wage rate, as the price level falls below the equilibrium price level, the quantity of real GDP supplied and the real GDP is than the potential GDP. The missing words are:
(a) increases; smaller
(b) decreases; greater
(c) increases; greater
(d) decreases; smaller

6. With the given money wage rate, as the price level rises above the equilibrium price level, the quantity of real GDP supplied and real GDP potential GDP. The missing words are:

(a) decreases; exceeds
(b) decreases; does not exceed
(c) increases; does not exceed
(d) increases; exceeds

7. Find a correct statement.
(a) If real GDP is below equilibrium GDP, firms start to decrease production.
(b) A smaller increase in aggregate demand than the increase in the long-run aggregate supply (LAS) brings inflation.
(c) A rise in the money wage rate shifts the SAS curve leftward.
(d) Economic growth means a leftward shift in the long-run aggregate supply (LAS) curve.

8. Find a correct statement.
(a) If real GDP is below equilibrium GDP, firms start to decrease production.
(b) A larger increase in aggregate demand than the increase in the long-run aggregate supply (LAS) brings inflation.
(c) A rise in the money wage rate shifts the SAS curve rightward.
(d) Economic growth means a leftward shift in the long-run aggregate supply (LAS) curve.

9. Which of the following would lead to an increase in aggregate demand?
(a) A decrease in government expenditure
(b) An increase in exports
(c) A rise in interest rate
(d) A fall in consumption expenditure

10. Which of the following would lead to an increase in aggregate demand?
(a) A fall in interest rate
(b) An decrease in exports
(c) A decrease in government expenditure
(d) A fall in consumption expenditure

11. Suppose an increase in real GDP by $50 billion results in an increase in disposable income by $40 billion. This leads to an increase of consumption by $30 billion. What are the marginal propensity to consume (MPC) and the marginal propensity to save (MPS)?

(a) 0.60, 0.40
(b) 0.75, 0.25
(c) 0.80, 0.20
(d) 0.33, 0.67

12. Suppose an increase in real GDP by $30 billion results in an increase in disposable income by $25 billion. This leads to an increase of consumption by $20.5 billion. What are the marginal propensity to consume (MPC) and the marginal propensity to save (MPS)?

(a) 0.85, 0.15
(b) 0.82, 0.18
(c) 0.68, 0.32
(d) 0.37, 0.63

13. Which of the following is autonomous expenditure (not influenced by real GDP)?
(a) Consumption (C) and Government expenditure (G)
(b) Consumption (C) and Imports (M)
(c) Investment (I) and Government expenditure (G)
(d) Exports (X) and Imports (M)

14. Which of the following is induced expenditure which is influenced by real GDP?
(a) Consumption (C) and Government expenditure (G)
(b) Consumption (C) and Imports (M)
(c) Investment (I) and Government expenditure (G)
(d) Exports (X) and Imports (M)

15. Assume that there are no changes in income tax rates and imports. What is the size of multiplier if the marginal propensity to save (MPS) is 0.25?
(a) 5
(b) 4
(c) 3
(d) 2

16. Assume that there are no changes in income tax rates and imports. What is the size of multiplier if the marginal propensity to consume (MPC) is 0.75?

(a) 5
(b) 4
(c) 3
(d) 2

17. Suppose that government expenditure increases by $0.5 billion and the slope of aggregate expenditure (AE) curve is 0.75. What would be the change in real GDP?
(a) An increase by $2 billion
(b) An increase by $4 billion
(c) A decrease by $4 billion
(d) A decrease by $2 billion

18. Suppose that government expenditure decreases by $1.5 billion and the slope of aggregate expenditure (AE) curve is 0.75. What would be the change in real GDP?
(a) An increase by $2 billion
(b) An increase by $6 billion
(c) A decrease by $4 billion
(d) A decrease by $6 billion

19. Which of the following is the effect of an increase in investment?
(a) In the short run, the AE curve shifts upward and the AD curve shifts rightward.
(b) The SAS curve will shift leftward and the real GDP exceeds potential GDP in the long run.
(c) There will be recessionary gap created in the short run.
(d) The multiplier is positive in the long run.

20. Which of the following is the effect of a decrease in government expenditure?
(a) In the short run, the AE curve shifts downward and the AD curve shifts leftward.
(b) The SAS curve will shift leftward and the real GDP exceeds potential GDP in the long run.
(c) There will be recessionary gap created in the short run.
(d) The multiplier is positive in the long run.

21. Which of the following factors would not lead to demand-pull inflation?
(a) An increase in government expenditure
(b) An increase in the quantity of money
(c) An increase in exports
(d) An increase in tax

22. Which of the following factors would not lead to demand-pull inflation?
(a) An increase in government expenditure
(b) An increase in the quantity of money
(c) An decrease in exports
(d) An decrease in tax

23. A rise in the prices of crude oil would shift the short-run supply (SAS) curve and this would cause inflation. Find the missing words.
(a) leftward; demand-pull
(b) rightward; demand-pull
(c) leftward; cost-push
(d) rightward; cost-push

24. A rise in the prices of raw materials would shift the short-run supply (SAS) curve and this would cause inflation. Find the missing words.
(a) leftward; demand-pull
(b) rightward; demand-pull
(c) leftward; cost-push
(d) rightward; cost-push

25. The real business cycle theory says that a decrease in productivity would lead to a in labour demand and result in a in real wage rate. The missing words are:
(a) decrease; fall
(b) increase; fall
(c) decrease; rise
(d) increase; rise

26. The real business cycle theory says that an increase in productivity would lead to in labour demand and result in a in real wage rate. The missing words are:
(a) decrease; fall
(b) increase; fall
(c) decrease; rise
(d) increase; rise

27. Which of the following factors would not lead to cost-push inflation?
(a) An increase in money wage rate
(b) An increase in imports
(c) A rise in price of raw materials
(d) A rise in oil price

28. Which of the following factors would not lead to cost-push inflation?
(a) An increase in money wage rate
(b) An increase in exports
(c) A rise in price of raw materials
(d) A rise in oil price

29. A rapid growth of trade surplus in a country would cause inflation in the country as the real GDP would be than the potential GDP in the short run. Find the missing words.
(a) cost-push; greater
(b) cost-push; smaller
(c) demand-pull; greater
(d) demand-pull; smaller

30. An investment boom in a country and growing world demand for the country's products would cause inflation in the country as the real GDP would be than the potential GDP in the short run. Find the missing words.
(a) cost-push; greater
(b) cost-push; smaller
(c) demand-pull; greater
(d) demand-pull; smaller

31. Which of the following is not a component of fiscal policy?
(a) Autonomous tax multiplier
(b) Balanced budget multiplier
(c) Government expenditure multiplier
(d) Money supply multiplier

32. Which of the following is not a component of fiscal policy?
(a) Interest rate multiplier
(b) Balanced budget multiplier
(c) Government expenditure multiplier
(d) Autonomous tax multiplier

33. Find an incorrect statement about fiscal policy instrument?
(a) The size of government expenditure multiplier is greater than the autonomous tax multiplier.
(b) A decrease in government expenditure decreases equilibrium expenditure.
(c) An increase in autonomous taxes decreases aggregate expenditure.
(d) If both government expenditure and taxes decrease by a same amount, equilibrium expenditure increases.

34. Find a correct statement about fiscal policy instrument?
(a) The size of government expenditure multiplier is greater than the autonomous tax multiplier.
(b) An increase in government expenditure decreases equilibrium expenditure.
(c) A decrease in autonomous taxes decreases aggregate expenditure.
(d) If both government expenditure and taxes decrease by a same amount, equilibrium expenditure increases.

35. Which of the following statement is not true?
(a) A increase in tax on interest income would increase saving
(b) A decrease in tax on interest income would increase the supply curve of loanable funds
(c) A increase in tax on interest income would shift the supply curve of loanable funds leftward
(d) A tax on consumption would raise prices paid for consumption goods

36. Which of the following statement is not true?
(a) An increase in tax on interest income would decrease saving
(b) A decrease in tax on interest income would decrease the supply curve of loanable funds
(c) An increase in tax on interest income would shift the supply curve of loanable funds leftward
(d) A tax on consumption would raise prices paid for consumption goods

37. A presence of automatic stabiliser induced taxes on incomes and transfer payments when the economy is in recession. The missing words are:
(a) raises; decrease
(b) lowers; increase
(c) raises; increase
(d) lowers; decrease

38. A presence of automatic stabiliser induced taxes on incomes and transfer payments when the economy is in expansion. The missing words are:
(a) raises; decrease
(b) lowers; increase
(c) raises; increase
(d) lowers; decrease

39. The supply side effects of a decrease in income tax would be:
(a) Increase in aggregate supply but decrease in potential GDP
(b) Decrease in aggregate supply but no change in potential GDP
(c) Increase in both aggregate supply and potential GDP
(d) Decrease in both aggregate supply and potential GDP

40. The supply side effects of an increase in income tax would be:
(a) Increase in aggregate supply but decrease in potential GDP
(b) Decrease in aggregate supply but no change in potential GDP
(c) Increase in both aggregate supply and potential GDP
(d) Decrease in both labour supply and potential GDP

41. Which of the following is a monetary policy instrument that RBA can directly control or closely target?
(a) The exchange rate
(b) The monetary base
(c) The short-term interest rate
(d) All of the above

42. Which of the following is not a monetary policy instrument that RBA can directly control or closely target?
(a) Tax rate on interest income
(b) The monetary base
(c) The short-term interest rate
(d) The exchange rate

43. The open market purchase money supply and interest rate. The missing words are:
(a) decrease; lowers
(b) increases; lowers
(c) decreases; raises
(d) increases; raises

44. The open market sale money supply and interest rate. The missing words are:
(a) decrease; lowers
(b) increases; lowers
(c) decreases; raises
(d) increases; raises

45. When the RBA lowers the cash rate, which of the following is not true?
(a) The quantity of money and the supply of loanable funds decrease.
(b) The exchange rate and the long-term real interest rate fall.
(c) Consumption expenditure, investment, and net exports increase.
(d) The real GDP increase and price level rises.

46. When the RBA lowers the cash rate, which of the following is true?
(a) The quantity of money and the supply of loanable funds decrease.
(b) The exchange rate and the long-term real interest rate rise.
(c) Consumption expenditure, investment, and net exports decrease.
(d) The real GDP increase and price level rises.

47. If the RBA raises the cash rate, which of the following is true?
(a) Aggregate demand increases
(b) Real GDP increases
(c) Unemployment increases
(d) Price level rises

48. If the RBA raises the cash rate, which of the following is not true?
(a) Aggregate demand increases
(b) Real GDP decreases
(c) Unemployment increases
(d) Price level falls

49. Suppose in Australia that the neutral real cash rate is 2 per cent a year, the actual inflation rate is 1.5 per cent while the target inflation rate is 2.5 per cent a year, and the output gap is -1.5 per cent. Using the Taylor rule, what should be the cash rate for Australia?
(a) 3.00 per cent
(b) 2.75 per cent
(c) 2.50 per cent
(d) 2.25 per cent

50. Suppose that, in Australia, the neutral real cash rate is 2 per cent a year, and the actual inflation rate is 1 per cent while the target inflation rate is 2 per cent a year. The output gap is -2 per cent. Using the Taylor rule, what should be the cash rate for Australia?
(a) 1.50 per cent
(b) 1.75 per cent
(c) 2.00 per cent
(d) 2.50 per cent.

Reference no: EM131184347

Questions Cloud

Draw the supply and demand curves for canada and the us : ing supply and demand analysis for manufactures and assuming Canada is a high priced producer compared to the US, draw the supply and demand curves for Canada and the US as well as the import demand and supply curves assuming free trade.
Examine two reasons why employees join labor unions : From the scenario and the eActivity, examine two (2) reasons why employees join labor unions. Examine two (2) reasons why organizations prefer that unions do not represent their employees. Suggest two (2) benefits that unions can provide for an em..
What is the estimated maximum voltage : If the two lines have an insulation layer made of rubber of thickness 2 mm which has a breakdown voltage much higher than the breakdown voltage in air, what is the estimated maximum voltage allowed now assuming the permittivity of the insulation i..
Demonstrate an understanding of social learning theory : Demonstrate an understanding of social learning theory and Bloom's taxonomy may have contributed to the focus on the more recent theories of emotional intelligence
Find an incorrect statement about fiscal policy instrument : Find an incorrect statement about fiscal policy instrument? Which of the following is not a monetary policy instrument that RBA can directly control or closely target?
Write the pseudocode that defines the class : Create the class diagram and write the pseudocode that defines the class - create the class diagram and write the pseudocode that defines the dass.
Take an interview of a typical function manager : Take an interview of a typical function manager who you know. -The aims of his function - The performance measures used in his function- The constraints that he has to work with.
How would you describe your communication style : Describe a situation in which effective interpersonal communication skills contributed to your success. Describe your personal actions by which you convey to your staff that ethics/ethical behavior is a high priority with you and that you also exp..
Discuss the social worker role and boundaries within setting : Discuss the social worker's role and boundaries within the setting. What role does the social worker play in this setting? What are 3main responsibilities of the worker

Reviews

Write a Review

Macroeconomics Questions & Answers

  What would the changes in attendance would you expect

Movie tickets prices increased by 5% and resulted in a 8% drop in sales. What is the price elasticity of demand? 2. If ticket prices decreased by 5% instead of raising them, what would the changes in attendance would you expect? 3. If a competing cin..

  Security concerns in this environment

Discuss the security concerns in this environment and provide security methods that can be implemented to mitigate any malicious attacks through this gateway.

  Prepare credit and debit sheet

Joe Donaldson deposited $80,000 in his new business. Prepare all entries related to above transactions.

  Determining the government spending multiplier

a. What is the value of the government spending multiplier in this case? b. Given the size of the multiplier, what would be the implied change in income (gross domestic product) from the stimulus spending of $500 billion?

  Find the tangent line

Find the tangent line to y = 3x2 - 5x + 2 at x = 2. Express your answer in the form y = mx + b with slope m and y-intercept b.

  Determine what is quality-adjusted life year

What is quality-adjusted life year How can it be used to compare differences in health status between someone who is healthy and someone who is not Ca it be used to compare health outcomes of someone who is ill with someone who has died

  How would a regular lm curve be affected

How would a regular LM curve be affected if the private sector demand for money balances increased following heightened uncertainty about prospects for bonds?

  Suppose that new entry decreased your demand elasticity from

Suppose that new entry decreased your demand elasticity from -2 to -3 (made demand more elastic). By how much should you adjuct your price of $10?

  Why would expect the velocity of circulation

Suppose that long term interest rates in the economy were increasing due to strong economic growth and demand for loans in the world economy. Meanwhile suppose that the Fed was holding down its federal funds rate target. What would probably be hap..

  Calculate the economic cost of the time

Jim previously earned $70,000 per year, but he now pays himself $25,000 per year while he is building the new business. what is the economic cost of the time he contributes to the new business.

  Calculate changes in real gdp

In 1929 and 1933, GDP measured in current prices fell from $96 billion to $48 billion. Over the same period, relevant price index fell from 100 to 75.

  Explain how the use of such barriers creates higher

Trade barriers (quotas and tariffs) are often used to protect domestic workers. Explain how the use of such barriers creates higher unemployment rather than protecting it.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd