Stabilization Policies

Why are stabilization policies sometimes needed in order to achieve macroeconomic equilibrium?

• To control inflation and reduce unemployment

• To increase government spending only

• To decrease taxes for all sectors

• To focus solely on export enhancement

What are demand-side policies primarily designed to influence?

• The aggregate supply curve

• The cost of credit

• The aggregate demand curve

• The availability of credit

Which of the following is a focus of supply-side economics?

• The aggregate demand curve

• The availability of credit

• The aggregate supply curve

• The cost of credit

Monetary policies are actions by which entity?

• The Federal Trade Commission

• The Federal Reserve System

• The State Department

• The Treasury Department

What is the primary effect of the monetary policies mentioned in the text?

• They increase the aggregate supply

• They decrease the aggregate demand

• They change the cost and availability of credit

• They regulate international trade

What is the primary goal of demand-side policies in the economy?

• To increase or decrease total demand

• To regulate international trade

• To enforce labor laws

• To privatize government-owned enterprises

What does fiscal policy involve?

• Taxing and government spending

• Adjusting interest rates

• Controlling money supply

• Setting employment standards

Which economic policy approach was designed to lower unemployment by stimulating aggregate demand, exemplified by the building of the Hoover Dam?

• Keynesian economics

• Classical economics

• Supply-side economics

• Monetarism

According to Keynes's theory, what is the effect of a $50 billion decline in investment spending on the overall economy?

• No change in overall spending

• $50 billion increase in overall spending

• $100 billion decline in overall spending

• $25 billion decline in overall spending

What is the multiplier effect in Keynes's economic theory?

• A decrease in investment leads to a proportional decrease in overall spending

• A change in investment spending results in a magnified change in overall spending

• An increase in investment only affects the investment sector

• A decrease in investment does not affect overall spending