quiz 6

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Louisiana State University *

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201

Subject

Economics

Date

Apr 3, 2024

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docx

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1

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1. ow does the effectiveness of monetary policy depend on the interest rate elasticity of investment? a) More elastic investment leads to a stronger impact of monetary policy on aggregate demand b) Less elastic investment leads to a stronger impact of monetary policy on aggregate demand c) The interest rate elasticity of investment has no effect on the effectiveness of monetary policy d) The interest rate elasticity of investment determines the type of monetary policy used 2. What is the primary goal of supply-side economics? a) To stimulate aggregate demand through government intervention b) To promote economic growth through tax cuts and deregulation c) To stabilize financial markets through monetary policy d) To reduce income inequality through redistribution of wealth 3. Describe a situation where expansionary fiscal policy might be appropriate. a) During periods of high inflation b) During periods of high unemployment c) During periods of strong economic growth d) During periods of budget surplus 4. How does the effectiveness of fiscal policy depend on the size of the government multiplier? a) A larger multiplier leads to a stronger impact of fiscal policy on aggregate demand b) A smaller multiplier leads to a stronger impact of fiscal policy on aggregate demand c) The size of the government multiplier has no effect on the effectiveness of fiscal policy d) The size of the government multiplier determines the type of fiscal policy used 5. Explain the concept of the Laffer curve and its implications for tax policy. a) The Laffer curve illustrates the relationship between tax rates and tax revenue b) The Laffer curve illustrates the relationship between tax rates and government spending c) The Laffer curve illustrates the relationship between tax rates and inflation d) The Laffer curve illustrates the relationship between tax rates and economic growth
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