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2.When an economy has an aggregate expenditure of $150 billion and the real GDP of $140 billion, then households bought fewer new homes than they anticipated. Select one:True or False 3. Even though both fiscal and monetary policies experience time lags, there are long time lags associated with the legislative process in implementing a fiscal policy which makes it more difficult to use than monetary policy. Select one:True or False 4.In an open economy, like Australia, fiscal policies are more effective than monetary policies when reducing the business cycle fluctuations. Select one: True or False 5.Technological change will shift up the per-worker production function and enable countries to have sustained economic growth. Select one:True or False Ans all.. otherwise don't ans

Expansionary monetary policy and contractionary fiscal policy has a combined effect which is ________.a. a decrease in interest rate and decrease in tax ratesb. an increase in interest rate and increase in tax ratesc. an increase government spending and decrease in money supplyd. an increase in tax rates and decrease in interest rates

18. When using fiscal policy to smooth out business cycle fluctuations, the government should: Raise taxes to fight recession Cut taxes to fight inflation Raise taxes to fight inflation Rely as little as possible on automatic stabilizers 19. The paradox of thrift is an example of: Too much saving relative to exports A fallacy of composition Automatic stabilizers Fractional reserve banking 20. If the US dollar purchases more Mexican pesos: The dollar has depreciated The peso has appreciated Both the dollar and the peso have appreciated The peso has depreciated 21. True/False: It is possible for a country to invest more than it saves while running a balanced fiscal budget and a trade surplus. True False

1. Given the discussion of the effects of fiscal policy in this​ chapter, if the central bank does not change the policy​ rate, a foreign fiscal expansion is likely to​ __________. A. increase foreign output and not change the foreign exchange rate.   B. increase foreign output and decrease the foreign exchange rate.   C. decrease foreign output and not change the foreign exchange rate.   D. decrease both foreign output and the foreign exchange rate.   2.) Given the discussion of the effects of monetary policy in this​ chapter, a foreign monetary expansion is likely to​ __________. A. decrease foreign output and increase the foreign interest rate.   B. increase foreign output and decrease the foreign interest rate.   C. decrease both foreign output and the foreign interest rate.   D. increase both foreign output and the foreign interest rate.   3.)  Given the discussion of the effects of fiscal policy in this​ chapter, how does a foreign fiscal…

s in es Assume that US output and employment has collapsed. What is the likely policy response from our macro-policy makers?. None of the statements are correct. The president and congress will adopt an expansionary monetary policy by lowering interest rates. The Federal Reserve will adopt a contractionary monetary policy by raising interest rates. The president and congress will adopt an expansionary fiscal policy of increasing the supply of money. The president and congress will adopt an expansionary fiscal policy of tax increases. Moving to the next question prevents changes to this answer. !!! JUL 21 tv 10 A A

A country can use a combination of monetary and fiscal policies to stabilize or control their economy. Choose the most correct statement. O Only monetary policy can affect interest rates O Only fiscal policy can affect unemployment levels O Only monetary policy can affect the level of real GDP O The federal government is more active in monetary policy than fiscal policy 36

1. Explain by using a curve the effect of a decrease in the minimum reserve requirement on the balance of the money market 2. Explain by using a curve the effect of an increase in people's real wages on the labor market. 3. Explain with examples of the application of what is meant by the expansionary fiscal policy used by the government to control the country's economy

please explain each question  1. What effect a selling bond will have on the money market? Explain using bond prices. 2. Assume that fiscal policy can be accomplished by changing only one of G and T. In the IS-LM framework, suppose the effect on the general equilibrium output is the same between expansionary fiscal policy and expansionary monetary policy. Which one would you expect to have a greater impact on the equilibrium consumption? Explain in words. Hint: Monetary policy affects also affects Y in the IS-LM framework!

1. Using the information in this chapter, label each of the following statements true, false or uncertain. Explain briefly.   f. An increase in domestic interest rates, all other factors being equal, increases exports. g. A fiscal expansion, all other factors being equal, tends to increase net exports. h. Fiscal policy has a greater effect on output in an economy with fixed exchange rates than in an economy with flexible exchange rates. i. Underafixedexchangerate, the central bank must keep the domestic interest rate equal to the foreign interest rates.

Suppose the government undertook a fiscal policy by increasing government expenditure by 20 percent. Clearly demonstrate how this would result in the crowding out phenomena.c. Suppose the instead of fiscal policy, the government, through its monetary authority undertook an expansionary monetary policy by increasing nominal money supply by 20 percent. Clearly demonstrate how this would result in the crowding in phenomena.

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The enormous budget deficits of 2009 through 2011 meant that the federal government was borrowing upwards of $1.5 trillion per year. If that borrowing had limited the ability of the private sector to get financial capital for its purposes, economists would call this crowding out. There was O significant evidence this was a problem because interest rates were very high. O little evidence this was a problem because interest rates were very low. O significant evidence this was a problem because interest rates were very low. O little evidence this was a problem because interest rates were very high.

Who Controls Fiscal Policy? O The Federal Reserve Bank O The President and Congress O Congress Only O The President Only

Assume that the money supply in an economy is $900 million, the velocity of money is constant at 5, and the price per unit of output is $3. What is the real and the nominal GDP? The real GDP is $1,500 million, and the nominal GDP is $3,500 million. The real GDP is $1,600 million, and the nominal GDP is $4,500 million. The real GDP is $4,500 million, and the nominal GDP is $1,500 million. The real GDP is $1,500 million, and the nominal GDP is $4,500 million. The real GDP is $3,500 million, and the nominal GDP is $700 million.

Firstly, explain how monetary and fiscal policy is implemented and how they can be used to influence GDP and the price level.   Secondly, the quotation above highlights the unprecedented use that has been made of fiscal policy in countries such as the UK during the crisis. Briefly consider whether fiscal policy will remain the key policy instrument in these sorts of countries in the near future.

Explain the relationship between the effectiveness of monetary policy and the interest elasticity of money demand. Will the monetary policy be more or less effective the higher the interest elasticity of money demand? Explain. Now explain the relationship between fiscal policy and the interest elasticity of money demand. Why do the two relationships differ?

5 "Both Expansionary Fiscal Policy and Expansionary Monetary policy increase income in the IS-LM model" Discuss with graph and logic. In which case private sector will play a bigger role and why?

Ans both Otherwise dont ans

Which of the following statements is true of government spending? O An increase in government spending raises the equilibrium level of income by a multiple of the original spending increase. O Government spending is a part of monetary policy, not fiscal policy. O A decline in government spending brings about an expansion in the economy. O An increase in government spending increases the recessionary gap in the economy. An increase in government spending shifts the aggregate demand curve downward by a fraction of the rise in governiment spending.

If in the Euro Area the value added tax is decreased; then what happens to equilibrium interest and national income in the Euro Area under the following conditions: a)lnterest elasticity of Money demand is low b)lnterest elasticity of Money demand is high c)Interest elasticity of Money demand is zero Sketch the required graphics and explain the graphics