Question (TCO 6) Expansionary fiscal policy is so named because it

<pclass=”msonormal” style=”box-sizing: border-box;”>(TCO 6) Expansionary fiscal policy is so named because it

Student Answer: involves an expansion of the nation’s money supply.

necessarily expands the size of government.

is aimed at achieving greater price stability.

is designed to expand real GDP.

Instructor Explanation: Chapter 30.

Points Received: 1 of 1

Comments:

Question 2. Question :

(TCO 6) Suppose that the economy is in the midst of a recession. Which of the following policies would most likely end the recession and stimulate output growth?

Student Answer: A Congressional proposal to incur a Federal surplus to be used for the retirement of public debt.

Reductions in agricultural subsidies and veterans’ benefits.

Postponement of a highway construction program.

Reductions in Federal tax rates on personal and corporate income.

Instructor Explanation: Chapter 30.

Points Received: 1 of 1

Comments:

Question 3. Question :

(TCO 6) The crowding-out effect of expansionary fiscal policy suggests that

Student Answer: government spending increases at the expense of private investment.

imports replace domestic production.

private investment increases at the expense of government spending.

saving increases at the expense of investment.

Instructor Explanation: Chapter 30.

Points Received: 1 of 1

Comments:

Question 4. Question :

(TCO 5) The determinants of aggregate supply

Student Answer: are consumption, investment, government, and net export spending.

explain why real domestic output and the price level are directly related.

explain the three distinct ranges of the aggregate supply curve.

include resource prices and resource productivity.

Instructor Explanation: Chapter 29.

Points Received: 1 of 1

Comments:

Question 5. Question :

(TCO 6) Menu costs

Student Answer: increase during recession.

IN decrease during recession.

are the costs to firms of changing prices and communicating them to customers.

are sunk costs and therefore should be disregarded.

Instructor Explanation: Chapter 29.

Points Received: 0 of 1

Comments:

Question 6. Question :

(TCO 6) The MPC can be defined as that fraction of a

Student Answer: change in income that is not spent.

change in income that is spent.

given total income that is not consumed.

given total income that is consumed.

Instructor Explanation: Chapter 27.

Points Received: 1 of 1

Comments:

Question 7. Question :

(TCO 6) The size of the MPC is assumed to be

Student Answer: less than zero.

greater than one.

greater than zero, but less than one.

two or more.

Instructor Explanation: Chapter 27.

Points Received: 1 of 1

Comments:

Question 8. Question :

(TCO 5) Refer to the graph. Which of the following factors will shift AD1 to AD3?

Graph Description

Student Answer: An increase in expected returns on investment

An increase in productivity

A decrease in real interest rates

A decrease in consumer wealth

Instructor Explanation: Chapter 29.

Points Received: 1 of 1

Comments:

Question 9. Question :

(TCO 6) The multiplier can be calculated as:

Student Answer: 1/(MPS + MPC).

MPC/MPS.

1/(1 – MPC).

1 – MPC = MPS.

Instructor Explanation: Chapter 27.

Points Received: 1 of 1

Comments:

Question 10. Question :

(TCO 5) The American Recovery and Reinvestment Act of 2009

Student Answer: IN created a $700 billion rescue package for financial institutions.

cut taxes by $152 billion, distributed primarily as rebate checks to taxpayers.

implemented a $787 billion package of tax cuts and government expenditure increases.

substantially lowered interest rates in an attempt to stimulate investment spending.

Instructor Explanation: Chapter 30.

Points Received: 0 of 1

Comments:

Question 11. Question :

(TCO 5) What effect would each of the following have on aggregate demand or aggregate su

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