Fiscal policy affects the economy
Chapter 34 Problem Set #1

Quiz
•
Social Studies
•
9th - 12th Grade
•
Hard
Michael Sheehan
Used 1+ times
FREE Resource
21 questions
Show all answers
1.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
only in the short run.
only in the long run.
in both the short and long run.
in neither the short nor long run.
2.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Which of the following is not a reason the aggregate demand curve slopes downward? As the price level increases
firms may believe the relative price of their output has risen.
real wealth declines.
the interest rate increases.
the exchange rate increases.
3.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
For the U.S. economy, which of the following is the most important reason for the downward slope of the aggregate-demand curve?
the wealth effect
the interest-rate effect
the exchange-rate effect
the real-wage effect
4.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Which of the following is likely more important for explaining the slope of the aggregate demand curve of a small economy than it is for the United States?
the wealth effect
the interest-rate effect
the exchange-rate effect
the real-wage effect
5.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Which of the following is not a response that would result from a decrease in the price level and so help to explain the slope of the aggregate demand curve?
When interest rates fall, Sleepwell Hotels decides to build some new hotels.
The exchange rate falls, so French restaurants in Paris buy more Iowa pork.
Janet feels wealthier because of the price drop and so she decides to remodel her bathroom.
With prices down and wages fixed by contract, Millio’s Frozen Pizzas decides to lay off workers.
6.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Liquidity preference refers directly to Keynes' theory concerning
the effects of changes in money demand and supply on interest rates.
the effects of changes in money demand and supply on exchange rates.
the effects of wealth on expenditures.
the difference between temporary and permanent changes in income.
7.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Liquidity preference theory is most relevant to the
short run and supposes that the price level adjusts to bring money supply and money demand into balance.
short run and supposes that the interest rate adjusts to bring money supply and money demand into balance.
long run and supposes that the price level adjusts to bring money supply and money demand into balance.
long run and supposes that the interest rate adjusts to bring money supply and money demand into balance.
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