Which of the following is true of an expansionary fiscal policy?
a. It increases the level of aggregate demand.
b. It reduces the market rate of interest
c. It reduces the volume of net exports.
d. It facilitates a balanced budget.
a
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Assume that the expectation of a recession next year causes business investments and household consumption to fall, as well as the financing to support it. If the nation has low mobility international capital markets and a fixed exchange rate system, what happens to the GDP Price Index and current international transactions balance in the context of the Three-Sector-Model? a. The GDP Price Index
falls and current international transactions balance becomes more positive (or less negative). b. The GDP Price Index and current international transactions balance remain the same. c. The GDP Price Index falls and current international transactions balance remains the same. d. Real GDP falls and nominal value of the domestic currency rises. e. There is not enough information to determine what happens to these two macroeconomic variables.
The U.S. president convinces Congress to fund a national program to land astronauts on Mars. This action, all other things held constant, increases government spending and ______.
a. decreases net exports b. shifts the aggregate demand curve to the right c. causes movement along the aggregate demand curve d. increases consumer saving
If airlines give passengers under the age of 10 a 25% discount, then this is an example of price discrimination.
Answer the following statement true (T) or false (F)
The U.S. government offers tax credits on hybrid automobiles. This tax credit:
A. reduces the personal cost of abatement of car pollution. B. encourages people to drive and pollute more. C. increases the demand for gasoline. D. All of these