The use of interest rate changes to affect aggregate demand.
The use of interest rate changes to affect aggregate supply.
The use of government spending or tax policy to manage aggregate demand.
The use of government spending or tax policy to manage aggregate supply.
National defense and education
Scientific research and foreign aid.
Border patrol and interstate highway maintenance.
Law enforcement and environmental protection.
Tools of discretionary fiscal policy.
Social insurance programs.
Sources of aggregate demand.
Sources of disposable income.
Is the amount of household income collected as tax revenue.
Is the total income households have available to spend.
Is the portion of household income saved.
Is the portion of household income invested.
Aggregate output falls below potential output.
Potential output falls below aggregate output.
Transfer payments undermine incentives to work.
Taxes on corporate profits undermine incentives to invest.
An increase in personal taxes.
An increase in corporate taxes.
An increase in government spending.
An increase in interest rates.
Shift aggregate supply to the left.
Shift aggregate supply to the right.
Shift aggregate demand to the left.
Shift aggregate demand to the right.
Decreasing the money supply
Decreasing government spending
Decreasing transfer payments
An increase in government transfer payments that affects disposable income
A decrease in taxes that affects disposable income
An increase in taxes that affects disposable income
An increase in private investment spending, funded by tax cuts
Expansionary fiscal policy will actually shift aggregate demand to the left, rather than to the right.
Expansionary fiscal policy will actually shift aggregate supply, rather than aggregate demand.
Increases in government spending will actually have a contractionary effect.
It can actually be destabilizing.
Increased the government debt.
Caused interest rates to fall to 0%.
Shifted aggregate demand to the left.
Produced a full economic recovery.
Shifting aggregate demand to the left.
Shifting short-run aggregate supply to the right.
Contractionary fiscal policy.
Expansionary fiscal policy.
The slope of the short-run aggregate supply curve.
The slope of the long-run aggregate supply curve.
The size of the multiplier.
Whether the increase in government spending is supported by both political parties.
Increase GDP by the same amount as a $75 billion increase in government purchases of goods and services.
Increase GDP by a smaller amount than would a $75 billion increase in government purchases of goods and services.
Not affect aggregate demand, as it will only shift aggregate supply.
Increase the marginal propensity to consume, thereby decreasing the value of the multiplier.
Discretionary policy measures.
The presence of a budget deficit is proof that government is trying to expand aggregate demand.
Tax cuts will not boost aggregate demand unless the money is saved by consumers and then invested by businesses.
Because transfer payments typically rise during an economic recovery, they destabilize the economy.
An increase in government spending will have a greater effect on aggregate demand when the marginal propensity to consume is greater.
The interest rate falls.
The interest rate rises.
The unemployment rate rises.
The economy recovers from a recession.
That there would be no more recessionary gaps or inflationary gaps.
That the role of taxes and transfers as automatic stabilizers would be undermined.
That total household disposable income would be the same every year.
That actual GDP would equal potential GDP every year.
Cannot continually be honored as they are designed, given demographic trends.
Are a problem in the short run, but not in the long run.
Are not a cause for worry unless they lead to crowding out.
Are designed to offset an inflationary gap when it arises.
The total value of financial assets that can be used to purchase goods and services.
The total value of the nation's store of gold.
The total value of stock market holdings.
The annual sum of gains from trade.
Money plays a crucial role in generating gains from trade, because it makes indirect exchange possible.
In a barter economy, trade can only take place when there is a double coincidence of wants.
U.S. dollars are used as money only within U.S. borders.
An asset is liquid if it can easily be converted into cash.
A medium of exchange
A store of value
A unit of account
A means to increase purchasing power
A gold coin
A silver coin
A $5 bill in U.S. currency
Its usefulness as a commodity.
Its ability to be redeemed in precious metals.
Its historical reputation as a currency that maintains its value in international markets.
Its official status as a means of exchange.
Transferring funds from your checking account to your savings account
Transferring funds from your savings account to your checking account
Writing a check to a locksmith, who then deposits it in her checking account
Writing a check to a locksmith, who then deposits it in her savings account
Directly usable as a medium of exchange.
Good as a store of value, but not useful as a medium of exchange.
Not liquid enough to be included in M2.
Protect the dollar from inflation.
Prevent bank runs.
Preserve the value of the dollar in terms of gold.
Eliminate the need for banks to satisfy capital requirements.
Is determined by the Internal Revenue Service.
Is determined by the amount of gold held within U.S. borders
Is determined by the willingness of other countries to supply the United States with gold.
Is determined jointly by the federal government and the banking system.
M1 increases and M2 decreases.
M1 increases and M2 remains unchanged.
Both M1 and M2 remain unchanged.
M2 increases and M1 remains unchanged.
Depositing $100 cash in your checking account
Depositing $100 cash in your savings account
Writing a $75 check to a plumber who deposits it in his checking account.
Withdrawing $500 in cash from your savings account
You cash a paycheck.
You deposit your paycheck into your checking account.
You deposit your paycheck into your savings account.
Banks make loans against the excess reserves they hold.
The sum of currency in circulation and bank reserves.
Equal to M1.
Equal to M2.
The amount of currency held in bank vaults.
Deposits held in checking accounts
Currency in circulation
Currency in circulation
Checkable bank deposits
The money supply to the monetary base.
Bank deposits to currency in circulation.
Bank reserves to bank deposits.
M2 to M1.
Conducting monetary policy.
Helping banks become profitable.
Helping consumers acquire loans more easily.
Reducing the amount of U.S. currency held overseas.
The monetary base decreases, forcing the money supply to contract.
The monetary base decreases, allowing the money supply to expand.
The monetary base increases, forcing the money supply to contract.
The monetary base increases, allowing the money supply to expand.
Lowering the reserve requirement for banks
Lowering the discount rate
Selling Treasury bills on the open market
Making it easier for banks to acquire deposit insurance