20) When the government cuts taxes or increases government spending A) the aggregate demand curve shifts...

 

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20) When the government cuts taxes or increases government spending A) the aggregate demand curve shifts to the right. B) the long-run aggregate supply curve shifts to the left. the aggregate demand curve shifts to the left. Dy the short-run aggregate supply curve shifts to the left. 21) An increase in government spending without an accompanying increase 21) in taxes A) does not increase aggregate demand. B) would effectively eliminate an inflationary gap. requires additional government borrowing. D) causes investment spending to increase. 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 investment to rise. a decrease in interest rates which would cause private domestic investment to rise. D) an increase in interest rates which would cause private domestic investment to fall. 23) What do automatic stabilizers attempt to stabilize? A) aggregate demand () exports B) long-run aggregate supply D) imports 24) The advantage of automatic stabilizers is that they 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 A) 1. B) the percentage increase in taxes. the percentage increase in government expenditures. D) the reciprocal of the increase in government expenditures. 20) B) has no effect on; 50 D) increases; $100 billion 23) B) balanced budget. D) public debt. 24) 26) In Country Z, the government simultaneously increases its expenditures 26). by $25 billion and increases taxes by $25 billion. If the MPS is equal to 0.2, the government's action, real GDP by A) increases; $25 billion C) increases; $125 billion 25) 27) When government spending exceeds tax revenues during a specific time 27). period, this is known as a A) government budget deficit. C) government budget surplus. - 20) When the government cuts taxes or increases government spending A) the aggregate demand curve shifts to the right. B) the long-run aggregate supply curve shifts to the left. the aggregate demand curve shifts to the left. Dy the short-run aggregate supply curve shifts to the left. 21) An increase in government spending without an accompanying increase 21) in taxes A) does not increase aggregate demand. B) would effectively eliminate an inflationary gap. requires additional government borrowing. D) causes investment spending to increase. 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 investment to rise. a decrease in interest rates which would cause private domestic investment to rise. D) an increase in interest rates which would cause private domestic investment to fall. 23) What do automatic stabilizers attempt to stabilize? A) aggregate demand () exports B) long-run aggregate supply D) imports 24) The advantage of automatic stabilizers is that they 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 A) 1. B) the percentage increase in taxes. the percentage increase in government expenditures. D) the reciprocal of the increase in government expenditures. 20) B) has no effect on; 50 D) increases; $100 billion 23) B) balanced budget. D) public debt. 24) 26) In Country Z, the government simultaneously increases its expenditures 26). by $25 billion and increases taxes by $25 billion. If the MPS is equal to 0.2, the government's action, real GDP by A) increases; $25 billion C) increases; $125 billion 25) 27) When government spending exceeds tax revenues during a specific time 27). period, this is known as a A) government budget deficit. C) government budget surplus. -

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Ans 20 C the aggregate demand curve shifts to the left When the government cuts taxes or increases government spending it injects more money into the ... View the full answer