Homework Answers
(1) (B)
Higher tax decreases disposable income, which lowers consumption and output.
(2) (B)
Higher money supply shifts money supply curve to right, decreasing interest rate, which increases investment, raising aggregate demand and stimulating the economy.
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During the third quarter of 1997, Japanese GDP was falling at an annual rate of over...
During the third quarter of 1997, Japanese GDP was falling at an annual rate of over...
During the third quarter of 1997, Japanese GDP was falling at an annual rate of over 11 percent. Many blame the big increase in Japan's taxes in the spring of 1997, which was designed to balance the budget. Usually, if taxes are increased, A. disposable income declines, consumption falls, planned investment increases, planned aggregate expenditure increases, and aggregate income (output) falls. B. disposable income declines, investment increases, planned aggregate expenditure falls, and aggregate income (output) declines. C. disposable income declines,...
Suppose the Bank of Canada raises the overnight loans rate. Describe the ripple effects of this...
Suppose the Bank of Canada raises the overnight loans rate. Describe the ripple effects of this monetary policy. Other short-term interest rates and the exchange rate Consumption expenditure, investment, and net exports The quantity of money and supply of loanable funds Aggregate demand Real GDP growth and the inflation rate O A. rise; increase OB. fall; decrease O c. fall; increase OD. rise; decrease O A. decreases; decrease OB. increases; decrease or remain the same O c. decreases; increase or...
Money Demand According to Liquidity Preference Theery, why is the Money Demand curve downwaed sloping? a...
Money Demand According to Liquidity Preference Theery, why is the Money Demand curve downwaed sloping? a because interest rates rise as the Bank of Canada reduces the quantity of money demanded b. because interest rates fall as the Bank of Canada reduces the Money Supply c because people will want to hold less money as the cost of doing so fals d. because people will want to hold more money as the cost of doing so falls Money Demand and...
1. To stimulate economic activity during a severe recession, the strongest appropriate fiscal policy is: a....
1. To stimulate economic activity during a severe recession, the strongest appropriate fiscal policy is: a. an increase in taxes and/or an increase in government spending b. an increase in taxes and/or a decrease in government spending c. a decrease in taxes and/or an increase in government spending d. a decrease in taxes and/or a decrease in government spending e. a decrease in government purchases and/or a decrease in transfer payments 2. An increase in income tax rates: a. makes...
1. Which of the following is not an example of a capital resource? the expertise of...
1. Which of the following is not an example of a capital resource? the expertise of a computer programmer a pitch fork a commercial sewing machine 100 acres of farmland in central California Consider the market for argyle socks. Suppose there is an unsuccessful ad campaign (staring Pee Wee Herman) that decreases the popularity of wearing argyle socks significantly. What effect will the decrease in popularity have on the equilibrium price and quantity of argyle socks, ceteris paribus? Price and...
1. What is the short-run effect on the exchange rate of an increase in domestic real...
1. What is the short-run effect on the exchange rate of an increase in domestic real GNP, given expectations about future exchange rates? A.Money demand increases, the domestic interest rate increases, and the domestic currency depreciates. B.Money demand increases, the domestic interest rate increases, and the domestic currency appreciates. C.Money demand decreases, the domestic interest rate decreases, and the domestic currency appreciates. D.Money demand decreases, the domestic interest rate decreases, and the domestic currency depreciates. 2. In our discussion of...
1. To stimulate economic activity during a severe recession, the strongest appropriate fiscal policy is: a....
1. To stimulate economic activity during a severe recession, the strongest appropriate fiscal policy is: a. an increase in taxes and/or an increase in government spending b. an increase in taxes and/or a decrease in government spending! c. a decrease in taxes and/or an increase in government spending d. a decrease in taxes and/or a decrease in government spending e. a decrease in government purchases and/or a decrease in transfer payments 2. An increase in income tax rates: a. makes...
Which of the following describes what the Reserve Bank of Australia would do to pursue an...
Which of the following describes what the Reserve Bank of Australia would do to pursue an contractionary monetary policy? Use open market operations to buy bonds and securities. Use open market operations to sell bonds and securities Use open market operations to increase the overnight cash rate. Increase interest rates on mortgages and corporate loans. The Reserve Bank of Australia manages the supply of cash on a daily basis to ensure that every bank has sufficient cash to meet the...
Multiple choice. Circle the best answer. 3 points each 1) Silver is an example of a...
Multiple choice. Circle the best answer. 3 points each 1) Silver is an example of a A) commodity money, B) barter money, C) fiat money. D) representative money. 2. Which of the following functions of money would be violated if inflation were high? A) unit of account B) store of value C) certificate of gold D) medium of exchange 3. If nominal GDP is $600 billion and the money supply is SO billion, the velocity of money is A) 0.125....
answer every single picture QUESTION 5 Suppose James transfers $500 from his checking account to...
answer every single picture
QUESTION 5 Suppose James transfers $500 from his checking account to his savings account. As a result of this action, OM1 stays the same and M2 falls. M1 falls and M2 stays the same. OBoth M1 and M2 fall. OBoth M1 and M2 stay the same. We were unable to transcribe this image1 poi QUESTION 7 Suppose the required reserve ratio is 25%. Assuming that banks hold no excess reserves and consumers hold no cash, this...
During the third quarter of 1997, Japanese GDP was falling at an annual rate of over 11 percent. Many blame the big increase in Japan's taxes in the spring of 1997, which was designed to balance the budget. Usually, if taxes are increased, A. disposable income declines, consumption falls, planned investment increases, planned aggregate expenditure increases, and aggregate income (output) falls. B. disposable income declines, investment increases, planned aggregate expenditure falls, and aggregate income (output) declines. C. disposable income declines,...
Suppose the Bank of Canada raises the overnight loans rate. Describe the ripple effects of this monetary policy. Other short-term interest rates and the exchange rate Consumption expenditure, investment, and net exports The quantity of money and supply of loanable funds Aggregate demand Real GDP growth and the inflation rate O A. rise; increase OB. fall; decrease O c. fall; increase OD. rise; decrease O A. decreases; decrease OB. increases; decrease or remain the same O c. decreases; increase or...
Money Demand According to Liquidity Preference Theery, why is the Money Demand curve downwaed sloping? a because interest rates rise as the Bank of Canada reduces the quantity of money demanded b. because interest rates fall as the Bank of Canada reduces the Money Supply c because people will want to hold less money as the cost of doing so fals d. because people will want to hold more money as the cost of doing so falls Money Demand and...
1. To stimulate economic activity during a severe recession, the strongest appropriate fiscal policy is: a. an increase in taxes and/or an increase in government spending b. an increase in taxes and/or a decrease in government spending c. a decrease in taxes and/or an increase in government spending d. a decrease in taxes and/or a decrease in government spending e. a decrease in government purchases and/or a decrease in transfer payments 2. An increase in income tax rates: a. makes...
1. To stimulate economic activity during a severe recession, the strongest appropriate fiscal policy is: a. an increase in taxes and/or an increase in government spending b. an increase in taxes and/or a decrease in government spending! c. a decrease in taxes and/or an increase in government spending d. a decrease in taxes and/or a decrease in government spending e. a decrease in government purchases and/or a decrease in transfer payments 2. An increase in income tax rates: a. makes...
Which of the following describes what the Reserve Bank of Australia would do to pursue an contractionary monetary policy? Use open market operations to buy bonds and securities. Use open market operations to sell bonds and securities Use open market operations to increase the overnight cash rate. Increase interest rates on mortgages and corporate loans. The Reserve Bank of Australia manages the supply of cash on a daily basis to ensure that every bank has sufficient cash to meet the...
Multiple choice. Circle the best answer. 3 points each 1) Silver is an example of a A) commodity money, B) barter money, C) fiat money. D) representative money. 2. Which of the following functions of money would be violated if inflation were high? A) unit of account B) store of value C) certificate of gold D) medium of exchange 3. If nominal GDP is $600 billion and the money supply is SO billion, the velocity of money is A) 0.125....
answer every single picture
QUESTION 5 Suppose James transfers $500 from his checking account to his savings account. As a result of this action, OM1 stays the same and M2 falls. M1 falls and M2 stays the same. OBoth M1 and M2 fall. OBoth M1 and M2 stay the same. We were unable to transcribe this image1 poi QUESTION 7 Suppose the required reserve ratio is 25%. Assuming that banks hold no excess reserves and consumers hold no cash, this...
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