Megan Clermont
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1000 (Monetary and Fiscal Policy) Intro to Economics Test sobre Monetary and Fiscal Policy, creado por Megan Clermont el 14/04/2016.

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Megan Clermont
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Monetary and Fiscal Policy

Monetary and Fiscal Policy

Pregunta 1 de 20

1

According to the theory of liquidity preference, how is the money supply affected by the interest rate?

Selecciona una de las siguientes respuestas posibles:

  • directly

  • negatively

  • not affected

  • positively

Explicación

Pregunta 2 de 20

1

When the interest rate increases, how do the opportunity cost of holding money and the quantity of money demanded change?

Selecciona una de las siguientes respuestas posibles:

  • The opportunity cost of holding money increases, so the quantity of money demanded increases.

  • The opportunity cost of holding money increases, so the quantity of money demanded decreases.

  • The opportunity cost of holding money decreases, so the quantity of money demanded decreases.

  • The opportunity cost of holding money decreases, so the quantity of money demanded increases.

Explicación

Pregunta 3 de 20

1

According to liquidity-preference theory, if the quantity of money demanded is greater than the quantity supplied, what will happen to the interest rate and the quantity of money demanded?

Selecciona una de las siguientes respuestas posibles:

  • The interest rate will increase, and the quantity of money demanded will increase.

  • The interest rate will increase, and the quantity of money demanded will decrease.

  • The interest rate will decrease, and the quantity of money demanded will decrease.

  • The interest rate will decrease, and the quantity of money demanded will increase.

Explicación

Pregunta 4 de 20

1

Which of the following shifts money demand to the right?

Selecciona una de las siguientes respuestas posibles:

  • an increase in the interest rate

  • a decrease in the price level

  • an increase in the price level

  • a decrease in the interest rate

Explicación

Pregunta 5 de 20

1

Which of the following is an effect of an increase in the interest rate?

Selecciona una de las siguientes respuestas posibles:

  • It induces firms to invest more.

  • It shifts money demand to the right.

  • It leads to the appreciation of the exchange rate.

  • It induces households to increase consumption.

Explicación

Pregunta 6 de 20

1

How does an increase in the price level affect the interest rate?

Selecciona una de las siguientes respuestas posibles:

  • It increases the money demand and lowers the interest rate.

  • It lowers the money demand and increases the interest rate.

  • It increases the money demand and the interest rate.

  • It lowers the money demand and the interest rate.

Explicación

Pregunta 7 de 20

1

In the short run, what effect does an increase in the money supply have on interest rates and aggregate demand?

Selecciona una de las siguientes respuestas posibles:

  • It causes interest rates to decrease and aggregate demand to shift left

  • It causes interest rates to increase and aggregate demand to shift right.

  • It causes interest rates to decrease and aggregate demand to shift right.

  • It causes interest rates to increase and aggregate demand to shift left.

Explicación

Pregunta 8 de 20

1

If the Bank of Canada conducts open-market sales, how do the money supply and the aggregate demand change?

Selecciona una de las siguientes respuestas posibles:

  • The money supply increases, and aggregate demand shifts left.

  • The money supply increases, and aggregate demand shifts right.

  • The money supply decreases, and aggregate demand shifts left.

  • The money supply decreases, and aggregate demand shifts right.

Explicación

Pregunta 9 de 20

1

The economy is in long-run equilibrium. Suppose that automatic teller machines become cheaper and more convenient to use, and as a result the demand for money falls. Other things being equal, what would we expect will happen to the price level and real GDP in the short and long run?

Selecciona una de las siguientes respuestas posibles:

  • In the short run, the price level and real GDP would rise, but in the long run the price level would rise and real GDP would be unaffected.

  • In the short run, the price level and real GDP would fall, but in the long run the price level would fall and real GDP would be unaffected.

  • In the short run, the price level and real GDP would rise, but in the long run they would both be unaffected.

  • In the short run, the price level and real GDP would fall, but in the long run they would both be unaffected.

Explicación

Pregunta 10 de 20

1

How does the interest rate change when the price level falls and when the money supply falls?

Selecciona una de las siguientes respuestas posibles:

  • The interest rate rises when the price level falls and falls when the money supply falls.

  • The interest rate falls when the price level falls and rises when the money supply falls.

  • The interest rate rises both when the price level falls and when the money supply falls.

  • The interest rate falls both when the price level falls and when the money supply falls.

Explicación

Pregunta 11 de 20

1

In a small open economy with a flexible exchange rate, a monetary injection by the Bank of Canada causes which of the following?

Selecciona una de las siguientes respuestas posibles:

  • It causes a shift of the aggregate-demand curve farther to the right than it would in a closed economy.

  • It causes an additional decrease in demand for Canadian-produced goods and services that is not realized in a closed economy.

  • It causes net exports to fall.

  • It causes the dollar to appreciate.

Explicación

Pregunta 12 de 20

1

Fiscal policy refers to the idea that aggregate demand is changed by changes in what?

Selecciona una de las siguientes respuestas posibles:

  • trade policy

  • government spending and taxes

  • the money supply

  • exchange rates

Explicación

Pregunta 13 de 20

1

If the multiplier is 5, what is the MPC?

Selecciona una de las siguientes respuestas posibles:

  • 0.75

  • 0.80

  • 1.00

  • 0.50

Explicación

Pregunta 14 de 20

1

If the MPC is 0.75 and there are no crowding-out effects, an initial increase in AD of $150 billion will eventually shift the AD curve to the right by how much?

Selecciona una de las siguientes respuestas posibles:

  • $133.33 billion

  • $80 billion

  • $600 billion

  • $800 billion

Explicación

Pregunta 15 de 20

1

Assume that the MPC is 0.8. Assume that the total crowding-out effect is $25 billion. How will an increase in government purchases of $9 billion shift the AD curve?

Selecciona una de las siguientes respuestas posibles:

  • It will shift the AD curve left by $25 billion.

  • It will shift the AD curve right by $45 billion.

  • It will shift the AD curve left by $20 billion.

  • It will shift the AD curve right by $20 billion.

  • It will shift the AD curve left by $45 billion.

Explicación

Pregunta 16 de 20

1

In a small open economy with a flexible exchange rate, an expansionary fiscal policy will cause which of the following to happen?

Selecciona una de las siguientes respuestas posibles:

  • It will cause an increase in the money supply

  • It will cause net exports to rise.

  • It will cause the dollar to depreciate.

  • It will cause a reduction in the demand for Canadian-produced goods.

Explicación

Pregunta 17 de 20

1

Canada is a small open economy with a flexible exchange rate. Which of the following effects will a contractionary fiscal policy have?

Selecciona una de las siguientes respuestas posibles:

  • It will cause the Canadian interest rate to fall below the world interest rate for a short period of time, which in turn will cause the dollar to depreciate and net exports to increase.

  • It will cause the Canadian interest rate to rise above the world interest rate for a short period of time, which in turn will cause the dollar to depreciate and net exports to increase.

  • It will cause the Canadian interest rate to fall below the world interest rate for a short period of time, which in turn will cause the dollar to appreciate and net exports to decrease.

  • It will cause the Canadian interest rate to rise above the world interest rate for a short period of time, which in turn will cause the dollar to appreciate and net exports to decrease.

Explicación

Pregunta 18 de 20

1

Suppose the closed economy is in long-run equilibrium. Technological change shifts the long-run aggregate-supply curve $80 billion to the right. At the same time, government purchases increase by $40 billion. If the MPC equals 0.8 and the crowding-out effect is $70 billion, what would we expect to happen in the long-run to real GDP and the price level?

Selecciona una de las siguientes respuestas posibles:

  • Real GDP would be higher but the price level would be the same.

  • Both real GDP and the price level would be lower.

  • Real GDP would be higher but the price level would be lower.

  • Both real GDP and the price level would be higher.

Explicación

Pregunta 19 de 20

1

Suppose the closed economy is in long-run equilibrium. Immigration of skilled workers shifts the long-run aggregate supply curve $60 billion to the right. At the same time, government purchases increase by $40 billion. If the MPC equals 0.75 and the crowding-out effect is $160 billion, what would we expect to happen in the long-run to real GDP and the price level?

Selecciona una de las siguientes respuestas posibles:

  • Real GDP would be higher, but the price level would be lower.

  • Both real GDP and the price level would be lower.

  • Both real GDP and the price level would be higher.

  • Real GDP would be higher, but the price level would be the same.

Explicación

Pregunta 20 de 20

1

If the federal government cuts spending to balance the federal budget, how can the Bank of Canada act to prevent unemployment and recession while maintaining the balanced budget?

Selecciona una de las siguientes respuestas posibles:

  • by increasing the money supply

  • by raising taxes

  • by decreasing the money supply

  • by cutting expenditures

Explicación

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