If American consumers decided to boycott grapes to protest working conditions of farm workers, everything else being equal, the:
a. price of grapes will rise.
b. supply of grapes will fall.
c. quantity of grapes supplied will fall.
d. demand curve for grapes shifts to the right.
Question 2Supply-side advocates believe that when taxes and regulations are too burdensome, people will:
a. save less.
b. work less.
c. provide less investment capital.
d. do all of the above.
Question 3Which of the following government agencies oversees monetary policy in the U.S.?
a. The Federal Reserve System
b. Congress
c. The Treasury Department
d. The Federal Trade Commission
e. The Department of Commerce
Question 4If both the supply and demand curves shift to the left, then we can conclude that there will be a(n):
a. increase in the equilibrium quantity sold.
b. decrease in the equilibrium quantity sold.
c. increase in the equilibrium price.
d. decrease in the equilibrium price.
Question 5Expansionary fiscal policy, other things being equal, will tend to:
a. increase interest rates.
b. increase investment.
c. increase net exports.
d. all of the above
Question 6The maximum money that can be created by the entire banking system is equal to a multiple of its excess reserves.
a. True
b. False
Indicate whether the statement is true or false
Question 7In general, an increase in price could be caused by either:
a. an increase in demand or a decrease in supply.
b. an increase in demand or an increase in supply.
c. a decrease in demand or an increase in supply.
d. an increase in demand or an increase in supply.
Question 8Which of the following helps explain how the multiplier and crowding-out effect impact the size of the shift in aggregate demand from a tax change.
a. Tax cuts stimulate consumer spending, earnings and profits rise, which further stimulates consumer spendingthe multiplier effect.
b. The higher income leads to an increase in the demand for money, which tends to lead to higher interest rates.
c. The higher interest rates make borrowing more costly and reduce investment spendingthe crowding-out effect.
d. All of the above
Question 9An increase in the amount of excess reserves held by a bank helps to increase the economy's money supply.
a. True
b. False
Indicate whether the statement is true or false
Question 10When the demand and supply of grapes both decrease at the same time, we can safely predict that the:
a. price of grapes will fall.
b. price of grapes will rise.
c. quantity of grapes exchanged will fall.
d. quantity of grapes exchanged will rise.
Question 11The impact of an increase in government purchases may be smaller than first assumed (in the crowding out effect) because:
a. As the new spending takes place, income and real GDP will rise which will cause households and firms to increase their demand for money to accommodate increased buying and selling.
b. The increase in the demand for money will cause the interest rate to rise.
c. As a result of the higher interest rate, consumers may decide against buying a car, a home, or other interest sensitive goods, and businesses may cancel or scale back plans to expand or buy new capital equipment.
d. All of the above