Use the following figures to answer the next question.
A decline in aggregate expenditures from AE2 to AE1 resulting from the real-balances, interest-rate, and foreign purchases effects would be depicted as a ________.
A. shift of aggregate demand from AD2 to AD1
B. shift of aggregate demand from AD1 to AD2
C. movement from A to C along aggregate demand curve AD1
D. movement from C to A along aggregate demand curve AD1
Answer: D
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The purchase of foreign currency by a central bank will tend to cause ________
A) an appreciation of the domestic currency B) a depreciation of the domestic currency C) an increase in the value of foreign exchange, but no change in the value of the domestic currency D) a decrease in the value of foreign exchange, but no change in the value of the domestic currency
If the government purchases multiplier is 4 and a change in government spending leads to a $500 million decrease in aggregate demand, we can conclude that
A. Government spending decreased by $125 million. B. Taxes increased by $500 million. C. Government spending decreased by $100 million. D. Taxes decreased by $100 million.
The shortest time lag for monetary policy is the implementation lag.
a. true b. false
A large "T-statistic" tell us that
A) a tiny change in the independent variable will cause a relatively large change in the dependent variable. B) we do not have enough data to obtain an accurate regression line. C) we can be confident that our estimated coefficient is not zero. D) we should have included more "lags" in our model. E) we have incorrectly switched the dependent and independent variables in our model.