Question

the government cuts tases or inereases government spending 20) ) the aggregate demand curve shifts to the right. tne long-run aggregate supply curve shifts to the left. C) the 20) When aggregate demand curve shifts to the left. the short-run aggregate supply curve shifts to the left. t spending without an accompanying increase 21) An increase in govenment spending n taxes demand A) does not increase aggregate B) would effectively eliminate an inflationary gap. Q mquires additional govemment borrowing spending to increase D) causes investment 22) If an increase in government spending causes an increase in government 22) borrowing this could induce A) an increase in interest rates but no effect on private domestic investment B) an increase in interest rates which would cause private domestic ) a decrease in interest rates which would cause private domestic D) an increase in interest rates which would cause private domestic investment to rise. investment to rise investment to fall 23) What do automatic stabilizers attempt to stabilize? 23) A) aggregate demand C) exports B) long-run aggregate supply D) imports 24) The advantage of automatic stabilizers is that they 24) A) reduce the size of the net public debt. B) help to balance the budget C) help reduce the inflation rate. D) reduce the fluctuations in the business cycle. 25) The balanced-budget multiplier is equal to 25) B) the percentage increase in taxes. O he peroentage increase in government expenditures 26) In Country Z, the government simultaneously increases its expenditures 26) nd increases taxes by $25 billion. If the MPS is equal to 0.2, the government's action A) increases; $25 billion c) C) increases; $125 billion B) has no effect on; $o D) increases; $100 billion 27) When govenment period tchiss hent exceeds prdis i ntending exceeds tax revenues during a specific time A) government budget deficit. O) government budget surplus. as a B) balanced budget. D)ub

Answer 1

Ans

1 A because it increase demand for goods and services at each price kevel

2 c because additional spending must be financed somehow

3 D. This is what is called crowding out by economists

4 AD since its volatile particularly investment

Can answer only 4 parts according to Chegg policy