Unit 5 Quiz

Policymakers often combine ______ policy and ______ policy to influence the economy.

• fiscal, monetary

• educational, health

• domestic, foreign

• environmental, social

The short-run ______ curve shows a trade-off between ______ and unemployment.

• Phillips, inflation

• demand, supply

• supply, inflation

• production, demand

Expansionary monetary policy can stimulate the economy in the short run, but according to the ______ theory of money, it will lead to higher ______ in the long run.

• quantity, inflation

• Keynesian, growth

• modern, stability

• supply-side, employment

An increase in deficit spending increases the national ______ and often results in an increase in the real interest ______.

• debt, rate

• budget, savings

• surplus, investments

• economy, dividends

More physical or human capital causes economic growth and shifts the long-run aggregate supply curve to the ______.

• right

• left

• center

• bottom

True or False: Expansionary fiscal policy implemented by the central bank can cause inflation in the long run.

• True

• False

Which of the following is an example of fiscal policy?

• Open market operations

• Expansionary monetary policy

• Electing officials

• Increasing government spending

What is the likely result of expansionary monetary policy?

• A decrease in nominal interest rates and an increase in employment

• A decrease in nominal interest rates and a decrease in employment

• An increase in nominal interest rates and an increase in employment

• An increase in nominal interest rates and a decrease in employment

Fiscal policy is implemented by the ______.

• central bank

• president

• treasury

• congress

What is the equation for the quantity theory of money?

• Money supply times velocity of money equals GDP

  MxV=PxY

• Money supply divided by velocity of money equals GDP