Questions on fiscal policy and monetary policy

Reference no: EM1312673

Fiscal Policy

1. If the MPC in an economy is .8, government could shift the aggregate demand curve rightward by $100 billion by:

2. An appropriate fiscal policy for severe demand-pull inflation is:

Use the following to answer questions 3:

3. Refer to the above diagram, in which Qf is the full-employment output. If aggregate demand curve AD1 describes the current situation, appropriate fiscal policy would be to:

How Banks and Thrifts Create Money

4. If the reserve ratio is 15 percent and commercial bankers decide to hold additional excess reserves equal to 5 percent of any newly acquired checkable deposits, then the relevant monetary multiplier for the banking system will be:

Monetary Policy

5. Which of the following is correct? When the Federal Reserve buys government securities from the public, the money supply:

6. If the Federal Reserve authorities were attempting to reduce demand-pull inflation, the proper policies would be to:

7. If the economy were encountering a severe recession, proper monetary and fiscal policies would call for:

Reference no: EM1312673

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