Macro G&S Market

The higher the interest rate the lower the AD.

• true

• false

Fiscal expansion means lower G or Tr and/or higher T

• true

• false

The fiscal policy is the. govenment ́s tool to manage the public deficit and to promote GDP

growth.

• true

• false

Fiscal expansion will improve the public sector balance (lower deficit or higher surplus)

• true

• false

A fiscal expansion will. promote GDP growth through a higher AD (higher G and higher Yd so higher C)

• true

• false

The Kenesian multiplier is explained by the consumer ́s behaviour reacting to changes in Yd

• true

• false

The higher the reaction of consumers, increasing C as a response to a lower T level (higher

Yd=YT, the higher the value of the multiplier

• true

• false

Higher values of the marginal propensity to consume make the fiscal policy more efficient

• true

• false

To get the IS cuve, we consider a change in the interest rate and we analyze its effect in the

G&S market (lower I so lower AD so lower Y)

• true

• false

The IS curve means that a higher interest rate lowers the investment and also AD, GDP and income Y

• true

• false