Macro 1

If the government and Federal Reserve decide to conduct expansionary policy, what phase of the business cycle is the economy currently operating in

• Contractionary phase

• expansionary phase

• peak

• Depressionary phase

If the government and Federal Reserve decide to conduct contractionary policy, what phase of the business cycle is the economy currently operating in

• Contractionary phase

• expansionary phase

• peak

• Depressionary phase

Open market operations is when

• The Central bank changes the reserve requirement or discount rate

• The government changes the reserve requirement or discount rate

• The Central bank buys or sells government bonds

• The government buys or sells government bonds

If the government increases spending, what will occur on the phillips curve?

• there will be a movement up the phillips curve, showing an increase in price and a decrease in unemployment

• there will be a movement down the phillips curve, showing an decrease in price and a increase in unemployment

• There will be a right shift of the SRPC, showing an increase in prices and increase in unemployment

• There will be a left shift of the SRPC, showing an decrease in prices and decrease in unemployment

If the government conducts expansionary fiscal policy, which of the following could they do?

• Decrease taxes

• decrease government spending

• increase the Reserve requirement

• buy bonds

If the Money supply curve shifted right, which of the following did not occur

• The nominal interest rate increased

• Real interest rated decreased if prices are constant

• AD will shift right as well

• The Fed could have bought bonds or decreased the Discount rate

Which of the following is not appropriate monetary policy for an inflationary gap?

• Increase target rate on the Federal Funds Rate

• Increase Reserve requirement

• Sell bonds

• increase government spending

If business taxes are increased, what is the outcome on the SRPC?

• shift right

• shift left

• move up

• move down

If an economy starts in a recessionary gap, what is the which of the following is not true?

• They are operating beneath their PPC

• The LRAS is to the right of the Short run equilibrium

• Expansionary policy is needed

• The money supply curve would shift left with appropriate policy

If interest rates increase, what happens to demand for money

• it increases

• it decreases

• it is unaffected

• not enough information