ECON 110 Read & Interact Schiller & Gephardt Chapter 12 solutions complete answers

ECON 110 Read & Interact Schiller & Gephardt Chapter 12 solutions complete answers 

 

If the economy is in a recession and facing unemployment, Keynes would advocate for

 

If the economy is in an expansion and facing inflation, Keynes would advocate for

 

According to the basic rules for fiscal policy, the solution to an unemployment problem is to

 

According to the basic rules for fiscal policy, the solution to an unemployment problem is to _______ aggregate demand by _______ government spending or _______ taxes.

 

If there is a $500b tax cut and the MPC = 0.80, the initial increase in consumption will be _____. 

 

Tax increases or decreases in spending intended to reduce aggregate demand are known as:

 

What is the initial change in consumption if an economy's MPC is 0.75 and there is a decrease in taxes of $1.25 billion?

 

To achieve a $500 billion increase in total spending when the MPC = 0.8, the desired tax cut to meet this spending goal is _____. 

 

What is the initial change in consumption if an economy's MPC is 0.75 and there is a decrease in taxes of $1 billion?

 

To achieve a $300 billion increase in spending with an MPC = 0.75, the desired tax cut to meet this spending goal is _____. 

 

To induce an increase in consumption through a tax cut, the larger the MPC is, the   (smaller/larger) the tax cut needs to be. 

 

The aggregate demand curve shifts by an amount greater than an initial change in government spending. This result is caused by

 

To achieve a $300 billion increase in spending when the MPC = 0.75, the desired government spending increase to meet this spending goal is:

 

If government spending is $20b and the multiplier is 4, how much total change in spending can we expect?

 

To achieve a $500 billion increase in total spending when the MPC = 0.8, the desired increase in government spending to meet this spending goal is:

 

If consumers receive an additional $100 and the marginal propensity to consume is 0.80, then consumers will spend _______ and save _______ of the $100.

 

If consumers receive an additional $100 and the marginal propensity to consume is 0.60, then consumers will spend _______ and save _______ of the $100.

 

Increased government spending is a form of _____ that shifts the aggregate demand curve to the right.

 

Government spending is increased by $5 billion and the resulting rise of aggregate demand is $20 billion. This effect is due to:

 

If the macro equilibrium is less than the full-employment equilibrium,

 

If the price level is lower than the equilibrium price level, then aggregate quantity supplied is _______ aggregate quantity demanded.

 

If excessive demand exists, full-employment output is _______ equilibrium output.

 

If the macro equilibrium is equal to the full-employment equilibrium,

 

True or false: Macro equilibrium is the same as full-employment equilibrium (output).

 

Which of the following are tools of fiscal policy?

 

If the macro equilibrium is greater than the full-employment equilibrium,

 

The combination of price level and real output where aggregate demand equals aggregate supply is known as:

 

If the aggregate quantity supplied is greater than the aggregate quantity demanded, the current price level is _______ the equilibrium price level.

 

If inadequate demand exists, full-employment output is _____ equilibrium output.

 

When the price level is lower than the macro equilibrium price level,

 

Goods produced in the United States and sold to foreign consumers, firms, or governments are called  ______, and they increase aggregate demand because the goods are produced in the United States.

 

A reduction in government spending is likely to

 

When firms produce goods with the hope to resell them later, the result is a(n)

 

In economics, investment refers to:

 

Fiscal policy is the use of government _______ and _______ to alter macroeconomic outcomes.

 

The total quantity of output demanded at alternative price levels in a given time period, ceteris paribus, is:

 

Which of the following defines the composition of aggregate demand?

 

Consumption is expenditures by consumers on _____ goods and services.

 

The component of aggregate demand that is the largest in terms of dollar value is _______ spending.

 

The use of government taxes and spending to alter macroeconomic outcomes is known as

 

Which of the following is NOT an example of a personal consumption expenditure?

 

The total quantity of output demanded at alternative price levels in a given time period, ceteris paribus, is      (one word) demand.

 

An decrease in consumption will _______ aggregate demand.

 

The components of aggregate demand are:

 

_______ is expenditures by consumers on final goods and services.

 

If consumer confidence is      , consumers are likely to keep spending.

 

The component of aggregate demand that contributes most to total spending is _______ spending.

 

In economics investment refers to:

 

The term that covers all expenditures on goods and services by households is      .

 

Residential construction is counted as ______.

 

An increase in consumption will _______ aggregate demand.

 

Investment consists of:

 

The four major components of aggregate demand are consumption, investment, government spending and

 

Goods that are produced in a particular period but NOT sold in that period

 

The index of consumer confidence calculated by the University of Michigan and the Conference Board is used by economic doctors to:

 

A decline in investment spending will

 

      refers to business spending on plant and equipment.

 

Government       include all federal, state, and local government outlays on goods and services.

 

Which of the following is counted as investment?

 

Investment includes purchases of machinery, equipment, and tools; construction of new homes; and changes in business      .

 

When firms produce goods with the hope to resell them later, this represents a(n)

 

Transfer payments are excluded from government purchases as part of aggregate demand because:

 

An increase in investment spending will

 

True or false: Government spending includes only federal expenditures on goods and services.

 

For the purposes of determining aggregate demand, government spending includes:

 

An increase in government spending is likely to

 

When dealing with international trade, economists include ______ as a component of aggregate demand.

 

Transfer payments are not included as part of aggregate demand because they represent _____.

 

Net exports is exports minus       (Enter one word).

 

An increase in investment will _______ aggregate demand.

 

Goods produced in the United States and sold to foreign consumers, firms or governments or ______ increase aggregate demand because the goods were produced in the United States.

 

A rise in net exports will:

 

An reduction in government spending is likely to

 

If the price level was lower than the equilibrium price level, then aggregate quantity supplied is _______ aggregate quantity demanded.

 

When dealing with international trade, economists include net ______ as a component of aggregate demand.

 

_______ is the unique combination of price level and real output that is compatible with both aggregate demand and aggregate supply.

 

Net exports are

 

What is the equation for aggregate demand?

 

Foreign goods or ______ purchased by consumers, firms, or the government reduce aggregate demand because the goods were not produced in the United States.

 

If inadequate demand exists, full employment output is _____ equilibrium output.

 

A decrease in net exports will:

 

If the macro equilibrium is less than the full employment equilibrium,

 

When the price level is lower than macro equilibrium price level

 

The use of government taxes and spending to alter the aggregate demand and macroeconomic outcomes is referred to as       policy.

 

The combination of price level and real output where aggregate demand _______ aggregate supply is known as macro equilibrium.

 

A GDP gap can be eliminated by shifting the aggregate demand curve to the      .

 

Aggregate demand is equal to

 

One way to shift aggregate demand to the right is to       government spending.

 

True or false: Macro equilibrium is the same as full employment equilibrium (output).

 

Fiscal _______ such as increased government spending or decreased taxes leads to an increase in aggregate demand.

 

If the macro equilibrium is greater than the full employment equilibrium,

 

A tax cut or spending increase intended to increase aggregate demand is known as:

 

Fiscal policy is a tool that can shift

 

An increase in aggregate demand of $20 billion as a result of an increase in government spending by $5 billion is a result of the ______ effect.

 

An increase in government spending can be used to close a       gap.

 

Economists define personal saving as "not spending" or as "that part of       income not consumed".

 

An increase in government spending will have what effect on an economy's aggregate demand curve?

 

Saving equals disposable income minus      .

 

Fiscal stimulus is used to       (increase/decrease) aggregate demand and thus stimulate the economy.

 

The fraction of each additional dollar of disposable income spent on consumption is the

 

_______ is a tax cut or spending increase intended to increase aggregate demand.

 

If consumers receive an additional $100 and the marginal propensity to consume is 0.60 then consumers will spend _______ and save _______ of the $100.

 

Government spending is increased by $5 billion and the resulting rise of aggregate demand is $20 billion. This is due to:

 

The total impact on aggregate demand from an increase in government spending is:

 

Which of the following state how economists define the concept of personal saving? (Check all that apply.)

 

The ______ process magnifies the initial change in spending into successive rounds of new consumption spending.

 

Disposable income minus consumption equals:

 

The multiple by which an initial change in aggregate spending will alter _______ after an infinite number of spending cycles is the multiplier.

 

The fraction of each additional dollar of _______ spent on consumption is the MPC.

 

If consumers receive an additional $100 and the marginal propensity to consume is 0.80 then consumers will spend _______ and save _______ of the $100.

 

The multiplier is equal to

 

The fiscal stimulus to aggregate demand of an increase in government spending includes:

 

The total change in spending caused by an increase in government spending equals:

 

The multiplier process magnifies an initial change in spending through successive rounds of

 

If government spending is $10b and the multiplier is 4, how much total change in spending can we expect?

 

The multiple by which an initial change in aggregate spending will alter total expenditure after an infinite number of spending cycles is the

 

To achieve a $300 billion increase in spending and the MPC = 0.75, the desired government spending increase to meet this spending goal is:

 

The multiplier effect causes the aggregate demand curve to shift by an amount       than an initial change in government spending.

 

Which of the following would make AD shift to close the GDP gap?

 

(Multiplier) x (initial change in government spending) =

 

The government can ______ taxes to shift the aggregate demand curve rightward.

 

If government spending is $20b and the multiplier is 4, how much total change in spending can we expect

 

      income is after-tax income of consumers.

 

To achieve a $500 billion increase in total spending and the MPC = 0.8, the desired increase in government spending to meet this spending goal is:

 

How much a tax cut increases consumer spending is dependent upon the:

 

The aggregate demand curve shifts by an amount greater than an initial change in government spending. This is caused by

 

To achieve a $500 billion increase in total spending and the MPC = 0.8, the desired tax cut to meet this spending goal is:

 

Which of the following fiscal policy changes would make AD shift to close the GDP gap?

 

The government can reduce taxes to shift the aggregate demand curve in which direction?

 

If there is a $500b tax cut and the MPC = 0.80, the initial increase in consumption would be:

 

Disposable income is equal to: (Check all that apply.)

 

Corporate tax cuts raise after-tax profits, and should encourage additional      .

 

To induce an increase in consumption through a tax-cut, the larger the MPC is, the       the tax-cut needs to be

 

When aggregate supply is horizontal, a decrease in aggregate demand will cause

 

To achieve a $300 billion increase in spending with an MPC = 0.75, the desired tax cut to meet this spending goal is:

 

Which of the following are consistent with fiscal restraint?

 

When inflation occurs, a(n) appropriate fiscal policy to help control it may be

 

What is the initial change in consumption if an economy's MPC is 0.75 and there is a decrease in taxes by $1.25 billion?

 

Which of the following are fiscal restraint policies?

 

Tax cuts may be designed to stimulate both _______ and _______.

 

A reduction in government spending, in response to inflation, shifts the aggregate demand curve:

 

When aggregate supply is horizontal, an increase in aggregate demand will cause _____.

 

If government disregards or underestimates the multiplier effect, fiscal restraint could cause aggregate demand to:

 

Tax increases or decreases in spending intended to reduce aggregate demand is known as:

 

If government reduces spending by $300 billion, calculate the cumulative reduction in spending if the MPC is 0.9.

 

Fiscal restraint is an appropriate policy strategy during times of

 

Government can use _______ to reduce aggregate demand.

 

Examples of restrictive fiscal policy, or fiscal restraint, are

 

In times of inflationary pressures, economists typically recommend:

 

Reduced government spending, in response to inflation, shifts the aggregate demand curve to the      .

 

According to the basic rules for fiscal policy, the solution to an unemployment problem is to

 

The government could end up shifting AD leftward during fiscal restraint to a point below full-employment output if the _______ effect is ignored.

 

A budget       is the amount by which government expenditures exceed tax revenues.

 

If government reduces spending by $100 billion, calculate the cumulative reduction in spending if the MPC is 0.8.

 

An excess of government revenues over government expenditures in a given time period is known as

 

Government can use which of the following to reduce aggregate demand?

 

Which of the following contributed to the large increases in the public debt during the Great Recession of 2008-2009?

 

In times of inflationary pressure, economists usually recommend tax       to reduce aggregate demand.

 

If the economy was in a recession and facing unemployment, Keynes would advocated for

 

According to the basic rules for fiscal policy, the solution to an inflation problem is to _____ aggregate demand by _____ government spending or _____ taxes.

 

The amount by which government expenditures exceed government revenues in a given time period is known as

 

Because politicians often disagree about tax increases versus spending cuts:

 

A budget       is an excess of government revenues over government expenditures in a given time period.

 

Falling tax revenues and increased government spending contributed to the _________ during the Great Recession of 2008-2009. (Check all that apply.)

 

If the economy was in a expansion and facing inflation, Keynes would advocated for

 

The American Recovery and Reinvestment Act funded projects that lasted longer than the recession it was intended to fight and created large budget      .

 

 

Which of the following are components of aggregate demand?

 

Which of the following are the four major components of aggregate demand?

 

Which of the following are considered economic investment?

 

Investment expenditures consist of:

 

If the aggregate quantity supplied is greater than the aggregate quantity demanded, the current price level is _______ the equilibrium price level

 

The combination of prices and real output that is compatible with both aggregate demand and aggregate supply is called the

 

If excessive demand exists, full employment output is _______ equilibrium output.

 

Macro equilibrium is the unique combination of price level and real output that is compatible with both _______ and _______.

 

Government purchases and changing tax rates are tools used to implement:

 

If the macro equilibrium is equal to the full employment equilibrium,

 

If the aggregate quantity supplied is less than the aggregate quantity demanded, the current price level is _______ the equilibrium price level.

 

Increased government spending is a form of _____ which shifts the aggregate demand curve to the right.

 

Which of the following fiscal policy changes would make the AD increase?

 

To stimulate the economy using fiscal policy, government spending should _______.

 

To close the GDP gap, the government can _____ taxes to increase consumption and shift the aggregate demand curve to the _____.

 

To induce an increase in consumption through a tax cut, the smaller the MPC is, the ____ the tax cut needs to be.

 

When aggregate supply is upward sloping, an increase in aggregate demand will cause

 

When the aggregate supply curve is upward sloping, a decrease in aggregate demand will cause

 

What is the initial change in consumption if an economy's MPC is 0.75 and there is a decrease in taxes by $1 billion?

 

Which of the following might a government choose to combine in order to reduce aggregate demand and check inflation?

 

The government may reduce government spending or increase taxes in order to combat _______.

 

_______ aggregate demand by _______ government spending or _______ taxes.

 

The three types of investment include all final purchases of machinery, equipment, and tools; all construction; and changes in business _______.

 

Which of the following are the major components of aggregate demand?

 

The GDP gap is the difference between full-employment output and the amount of output demanded at current _______ levels.

 

Fiscal stimulus is used in order to _______ aggregate demand and thus the economy.

 

For the purpose of determining aggregate demand, government spending includes:

 

Other thing equal, an increase in government spending will shift an economy's aggregate demand curve to the _______.

 

Which of the following are tools of fiscal policy to stimulate the economy?

 

An increase in government purchases will shift the aggregate demand curve to the _______.

 

If the economy was in an expansion and facing inflation, Keynes would advocate for

 

U.S. households spend most of their disposable _______

 

Government may choose to combine spending decreases and tax increases in order to _______ aggregate demand and check inflation.

 

Reduced government spending, in response to inflation shifts the aggregate demand curve to the _______.

 

government can use _______ to reduce spending.

 

budget cuts should _______ the size of the desired fiscal restraint to achieve the targeted reduction in aggregate demand

 

a decrease in investment will _______ aggregate demand