Using the increased deposits to buy extra government bonds

With respect to the American Recovery and Reinvestment Act, which is TRUE?

The majority of the tax cuts in the United States were saved.

GDP will increase by $200 billion or more; multiplier is 1+ in a recession

Which of these would result in higher unemployment?

raising taxes and lowering government spending

The economy is near full employment; no impact on GDP; 0 multiplier

Which of these would be used by government to lower unemployment?

lowering taxes and increasing government spending

A tax increase shifts AD to the left

Which of these is an example of an automatic stabilizer?

during full employment welfare benefits going down

the correct direction for a long-run aggregate supply shock...

The relationship between monetary policy and lags is because monetary policy requires agreement among

Federal Open Market Committee members

the wrong direction., the correct direction for an aggregate demand shock.

Which is TRUE of the COVID-19 pandemic?

It shifted the LRAS supply curve to the left.

Which of these is considered government spending as part of expansionary fiscal policy?

the 2009 American Recovery and Reinvestment Act

the correct direction for an aggregate demand shock.

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Chapter 18

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Questions 39

Answers

1
See below
Timing
There is no difficulty
Crowding out
Magnitude
2
See below for part b
Doing nothing
Covering the decrease in deposits by selling government bonds
Using the increased deposits to buy extra government bonds
3
See below
The wrong direction
The correct direction for an aggregate demand shock
The correct direction for a long-run aggregate supply shock...
4
See below
the wrong direction.
the correct direction for an aggregate demand shock.
the correct direction for a long-run aggregate supply shock...
5
See below
Undetermined
Smaller, poor countries
Bigger, rich countries
6
With respect to the American Recovery and Reinvestment Act, which is TRUE?
The majority of the tax cuts in the United States were spent.
The tax cuts in the United States boosted economic security for everyone.
The tax cuts were associated with a large multiplier effect.
The majority of the tax cuts in the United States were saved.
7
See below for b.
This pushes v up
This pushes v down
8
See below for b.
There is no multilpier in a recession
GDP will increase by $200 billion or more; multiplier is 1+ in a recession
GDP will decrease by $200 billion or more; multiplier is 0 in a recession
GDP will not increase
9
See below
1
2
3
10
See below for part 2
Spend some and save the rest
Spend all of it
Do nothing
Save all of it
11
Which of these would result in higher unemployment?
automatic stabilizers
lowering taxes and increasing government spending
increasing the money supply
raising taxes and lowering government spending
12
See below for a.
The multiplier is around 1
The multiplier will increase by the amount of the GDP increase
The economy is near full employment; no impact on GDP; 0 multiplier
The economy is near zero employment; no impact on GDP; 0 multiplier
13
See below
Not, Not, Automatic Stabilizer
Automatic Stabilizer, Not, Not
Automatic Stabilizer, Automatic Stabilizer, Not
Not, Automatic Stabilizer, Not
14
See below
2
3
4
1
15
Which of these would be used by government to lower unemployment?
automatic stabilizers
lowering taxes and increasing government spending
raising taxes and lowering government spending
increasing the money supply
16
See below for a
A cut in taxes shifts AD to the left
A tax increase shifts AD to the left
17
Which of these is an example of an automatic stabilizer?
increasing government spending
decreasing taxes
during full employment welfare benefits going down
increasing the money supply
18
Which is a supply sided policy
unemployment comp
Large corporate loans
individual stimulus checks
direct payments to taxpayers
19
See below
the correct direction for a long-run aggregate supply shock...
the correct direction for an aggregate demand shock.
the wrong direction.
20
The time it takes for policymakers to determine whether their fiscal policies have worked is known as the:
legislative lag.
evaluation lag.
implementation lag.
recognition lag.
21
See below
bad, decrease
bad, increase
good, increase
good, decrease
22
See below
There is no difficulty
Timing
magnitude
Crowding out
23
See below for part a
Less deposits
More deposits
Undetermined deposits
24
See below
Stealing
Borrowing
Holding
Saving
25
With the American Recovery and Reinvestment Act, a lot of the tax cuts in the United States were
used to pay off debt
gifted
spent
donated
26
The relationship between monetary policy and lags is because monetary policy requires agreement among
Federal Open Market Committee members
Congress and the President
27
See below
Crowding out
magnitude
Timing
There is no difficulty
28
Which is a demand sided policy
paycheck protection program
aid to hospitals
Direct payments to taxpayers
large corporate loans
29
Which economist is credited with the concept of Ricardian equivalence?
Ricardo Montalbán
Ricardo Chambers
David Ricardo
John Ricardo Keynes
30
See below
the correct direction for a long-run aggregate supply shock...
the wrong direction.
the correct direction for an aggregate demand shock.
31
See below for part 1
Save all of it
Spend all of it
Spend some and save the rest
Do nothing
32
Which is TRUE of the COVID-19 pandemic?
It shifted the demand curve to the left.
It shifted the LRAS supply curve to the left.
It shifted the demand curve to the right.
It shifted the LRAS supply curve to the right.
33
See below
The wrong direction
The correct direction for an aggregate demand shock
The correct direction for a long-run aggregate supply shock...
34
Monetary policy has
the same length of lags as fiscal policy.
greater lags than fiscal policy.
fewer lags than fiscal policy.
35
See below
16%
50%
15%
5%
36
See below
Increase, decrease
Increase, increase
Not change, Just as much
Decrease, decrease
37
Which of these is considered government spending as part of expansionary fiscal policy?
Social Security
increasing the money supply
the 2009 American Recovery and Reinvestment Act
tax cuts
38
See below
3
1
4
2
39
See below
the correct direction for an aggregate demand shock.
the correct direction for a long-run aggregate supply shock...
the wrong direction.

Chapter 18 Flashcards | StudBud