13 if consumption expenditures are s180total planned investment is s75govermment purchas exports

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13. If consumption expenditures are $180, total planned investment is $75, government purchases exports are $20, imports are $40, and taxes are $25, aggregate demand must be a. $225. b. $250. c. $275. d. $300. 14. Fiscal policy is defined as changes in government expenditure to influence the economy. b. changes in tax rates to influence the economy. c. changes in the money supply to influence the economy. d. both a and b but not c. 15. If policymakers believe a recession is coming, the Keynesian view indicates that they should a. increase government spending and/or decrease taxes. b. balance the budget. c. increase tax rates, reduce government spending, and shift toward a budget surplus. 16. A balanced budget means that aggregate consumption is in balance with aggregate saving b. government spending is constant from year to year. c. public spending equals private spending. d. tax revenues during a period are equal to government expenditures. 17. The aggregate demand curve AD slopes downward to the right because a. a lower price level reduces the price of domestic goods relative to foreign goods, increasing net exports consumer spending (the real balance effect). b. a lower price level reduces the demand for money and lowers the real interest rate, stimulating (the international substitution effect). c. consumption and investment spending (the interest rate effect). d. all of the above are correct. 18. An increase in net exports will shift the AD curve to the: a. left by a multiple of the change in C, I, or G. b. left by the same amount as the change in C, I, or G. c. right by the same amount as the change in C, I, or G. d. right by a multiple of the change in C, I, or G. 19. The short-run aggregate supply SRAS curve: a. is explained by the interest rate, real-balances, and foreign purchases effects. b. gets steeper as the economy moves from the top of the curve to the bottom of the curve. c. shows the various amounts of real output that businesses will produce at each price level. d. is downsloping because real purchasing power increases as the price level falls, maximizing profit.

13. If consumption expenditures are $180, total planned investment is $75, government purchases exports are $20, imports are $40, and taxes are $25, aggregate demand must be a. $225. b. $250. c. $275. d. $300.
14. Fiscal policy is defined as changes in government expenditure to influence the economy. b. changes in tax rates to influence the economy. c. changes in the money supply to influence the economy. d. both a and b but not c.
15. If policymakers believe a recession is coming, the Keynesian view indicates that they should a. increase government spending and/or decrease taxes. b. balance the budget. c. increase tax rates, reduce government spending, and shift toward a budget surplus.
16. A balanced budget means that aggregate consumption is in balance with aggregate saving b. government spending is constant from year to year. c. public spending equals private spending. d. tax revenues during a period are equal to government expenditures.
17. The aggregate demand curve AD slopes downward to the right because a. a lower price level reduces the price of domestic goods relative to foreign goods, increasing net exports consumer spending (the real balance effect). b. a lower price level reduces the demand for money and lowers the real interest rate, stimulating (the international substitution effect). c. consumption and investment spending (the interest rate effect). d. all of the above are correct.
18. An increase in net exports will shift the AD curve to the: a. left by a multiple of the change in C, I, or G. b. left by the same amount as the change in C, I, or G. c. right by the same amount as the change in C, I, or G. d. right by a multiple of the change in C, I, or G.
19. The short-run aggregate supply SRAS curve: a. is explained by the interest rate, real-balances, and foreign purchases effects. b. gets steeper as the economy moves from the top of the curve to the bottom of the curve. c. shows the various amounts of real output that businesses will produce at each price level. d. is downsloping because real purchasing power increases as the price level falls, maximizing profit.

13 if consumption expenditures are s180total planned investment is s75govermment purchas exports are s20imports are 40and taxes are s25aggregate demand must be a 225 b250 c 275 d300 14fiscal 55966

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