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The theory of liquidity preference was developed by Irving Fisher.

A) True
B) False

Correct Answer

verifed

verified

If the marginal propensity to consume is 6/7,then the multiplier is 7.

A) True
B) False

Correct Answer

verifed

verified

Depending on the size of the multiplier and crowding-out effects,the rightward shift in aggregate demand from a tax cut could be larger or smaller than the tax cut.

A) True
B) False

Correct Answer

verifed

verified

An essential piece of the liquidity preference theory is the demand for money.

A) True
B) False

Correct Answer

verifed

verified

An increase in the money supply shifts the aggregate-supply curve to the right.

A) True
B) False

Correct Answer

verifed

verified

Stock prices often rise when the Fed raises interest rates.

A) True
B) False

Correct Answer

verifed

verified

For the U.S.economy,the most important reason for the downward slope of the aggregate-demand curve is the interest-rate effect.

A) True
B) False

Correct Answer

verifed

verified

If the government faced a balanced budget rule,it would be forced to raise taxes or decrease spending during a recession.

A) True
B) False

Correct Answer

verifed

verified

The multiplier is computed as MPC / (1 - MPC).

A) True
B) False

Correct Answer

verifed

verified

Permanent tax cuts have a larger impact on consumption spending than temporary ones.

A) True
B) False

Correct Answer

verifed

verified

The interest-rate effect is partially explained by the fact that a higher price level reduces money demand.

A) True
B) False

Correct Answer

verifed

verified

An increase in the money supply decreases the equilibrium interest rate and shifts the aggregate-demand curve to the right.

A) True
B) False

Correct Answer

verifed

verified

For a country such as the U.S. ,the wealth effect exerts a very important influence on the slope of the aggregate-demand curve,since U.S.wealth is large relative to wealth in most other countries.

A) True
B) False

Correct Answer

verifed

verified

Changes in monetary policy aimed at reducing aggregate demand involve decreasing the money supply or increasing the interest rate.

A) True
B) False

Correct Answer

verifed

verified

Other things the same,an increase in the price level causes the real value of the dollar to fall in the market for foreign-currency exchange.

A) True
B) False

Correct Answer

verifed

verified

An implication of the Employment Act of 1946 is that the government should respond to changes in the private economy to stabilize aggregate demand.

A) True
B) False

Correct Answer

verifed

verified

A severe problem that many economists have with the active use of monetary policy and fiscal policy to stabilize the economy is that,while those policies obviously work well in practice,they are not well understood on a theoretical level.

A) True
B) False

Correct Answer

verifed

verified

Other things equal,the higher the price level,the higher is the real wealth of households.

A) True
B) False

Correct Answer

verifed

verified

According to the IGM poll,most economists think that the crowding out effects were stronger than the stimulative effects of ARRA.

A) True
B) False

Correct Answer

verifed

verified

Some economists,called supply-siders,argue that changes in the money supply exert a strong influence on aggregate supply.

A) True
B) False

Correct Answer

verifed

verified

Showing 21 - 40 of 50

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