devry Eco312 week 5 quiz

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.

tax cuts during recession and reductions in government spending during inflation.
tax increases during recession and tax cuts during inflation.
tax cuts during recession and tax increases during inflation.
increases in government spending during recession and tax increases during inflation.

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.

net export effect.
wealth effect.
real-balances effect.
multiplier effect.

increase during recession.
decrease during recession.
are the costs to firms of changing prices and communicating them to customers.
are sunk costs and therefore should be disregarded.

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.

the same thing as disinvesting.
that households are spending more than their current incomes.
that saving and investment are equal.
that disposable income is less than zero.

An increase in expected returns on investment
An increase in productivity
A decrease in real interest rates
A decrease in consumer wealth

equates the real interest rate and the expected rate of return on investment.
magnifies initial changes in spending into larger changes in GDP.
keeps inflation within tolerable limits.
helps to stabilize the economy.

reduce inflationary pressure caused by oil price increases.
curb the overspending by households that contributed to the Great Recession.
bring the Federal budget back into balance.
stimulate aggregate demand and employment.

Question 11.11.(TCO 5) What effect would each of the following have on aggregate demand or aggregate supply? Explain.

a. A widespread fear by consumers of an impending economic depression

b. Labor Productivity (Output per man hour) goes up

(Points : 5)

Question 12.12.(TCO 6) Explain how fiscal policy (making changes to government spending and taxes) would affect aggregate demand (AD). (Points : 5)