Economics Questions

I'm not sure with my answers. All of questions are multiple choice and these are from "Macroeconomics fourth edition by R. Glenn Hubbard, Anthony Patrick O'Brien"

Questions are from Ch16. Fiscal Policy, Ch17. Inflation, unemployment, and federal reserve policy, Ch18. Macroeconomics in an Open Economy, and Cp19. The international financial systme. If you can finish it by 8:40 pm today, I will give you $20 more as a tip.

All 18 questions.

Question 1.1. Which of the following is an example of discretionary fiscal policy? (Points : 3)

        an increase in unemployment insurance payments during a recession

        an increase in income tax receipts with rising income during an expansion

        the tax cuts passed by Congress in 2001 to combat the recession

        a decrease in food stamps issued during an expansion or boom

Question 2.2. The majority of dollars spent by government prior to the Great Depression was spending at the ________ level. In the post World War II period, two-thirds to three quarters of all dollars spent by government in the United States are spent at the ________ level (Points : 3)

        federal; state and local

        state and local; federal

        state and local; state

        local; state

Question 3.3. The fastest growing category of government expenditure is (Points : 3)

        grants to state and local governments.

        defense spending.

        transfer payments.

        government purchases.

Year	Potential Real GDP	Real GDP	Price Level
2013	$14.0 trillion	$14.0 trillion	150
2014	14.5 trillion	14.8 trillion	154

Consider the hypothetical information in the table above for potential real GDP, real GDP and the price level in 2013 and in 2014 if the Congress and the president do not use fiscal policy. If the Congress and the president want to keep real GDP at its potential level in 2014, they should

(Points : 3)

        buy Treasury securities.

        conduct expansionary fiscal policy.

        decrease government purchases.

        decrease the discount rate.

5. A permanent tax cut would likely ________ consumption spending ________ than would a tax rebate like the one issued in 2008. (Points : 3)

        increase; more

        increase; less

        decrease; more

        decrease; less

6. if government spending and the price level increase, then (Points : 3)

        the interest rate increases, consumption declines, and investment spending declines.

        the interest rate decreases, consumption declines, and investment spending declines.

        the interest rate increases, consumption increases, and investment spending increases.

        the interest rate decreases, consumption increases, and investment spending increases.

7. During recessions, government expenditure automatically (Points : 3)

        falls because of programs such as unemployment insurance and Medicaid.

        rises because of programs such as unemployment insurance and Medicaid.

        falls because of the progressive income tax system.

        rises because of the progressive income tax system.

8. According to the short-run Phillips curve, the unemployment rate and the inflation rate are (Points : 3)

        unrelated.

        positively related.

        negatively related.

        unaffected by monetary policy.

9. What is the natural rate of unemployment? (Points : 3)

        the unemployment rate that exists when the economy is at potential GDP

        the unemployment rate that exists when the economy is at a trough in a business cycle

        an unemployment rate of 0%

        any unemployment rate that is above the inflation rate

10. What impact does monetary policy have on the long-run Phillips curve? (Points : 3)

        Monetary policy can only shift the long-run Phillips curve to the left.

        Monetary policy shifts the long-run Phillips curve to the right or left, depending on whether monetary policy is expansionary or contractionary.

        Monetary policy can only shift the long-run Phillips curve to the right.

        Monetary policy has no impact on the long-run Phillips curve.

11. In the long run, the Federal Reserve can control which of the following? (Points : 3)

        the inflation rate

        the unemployment rate

        the growth rate of real GDP in the economy

        the natural rate of unemployment

12. Contractionary monetary policy will result in (Points : 3)

        higher interest rates.

        increased rates of inflation.

        an upward shift in the short-run Phillips curve.

        a leftward shift in the long-run Phillips curve.

13. If the Federal Reserve announces that its TARGET for the federal funds rate is rising from 4 percent to 4.25 percent, how do you expect workers and firms to react? (Points : 3)

        As long as the Fed's announcement is credible, workers and firms will increase their consumption and investment spending, which will increase aggregate demand and inflation.

        As long as the Fed's announcement is credible, workers and firms will reduce their consumption and investment spending, which will reduce aggregate demand and reduce inflation.

        If the Fed's announcement is not credible, workers and firms will not expect inflation to fall so they will reduce their consumption and investment spending, which will increase aggregate demand and reduce inflation.

        Workers and firms will incorporate the increase in interest rates into their expectations of inflation, and they will expect inflation to rise as a result of Fed's policy announcement.

14. If the Fed decided to reverse its policy actions implemented during the heart of the last recession, the Fed would be acting to try to prevent (Points : 3)

        a decrease in unemployment.

        an increase in unemployment.

        an increase in deflation.

        an increase in inflation.

15.

If foreign holdings of U.S. dollars increase, holding all else constant,

(Points : 3)

If foreign holdings of U.S. dollars increase, holding all else constant,

        the balance on the U.S. current account will increase.

        the balance on the U.S. capital account will increase.

        the U.S. balance of trade will increase.

16. The balance of trade includes trade in (Points : 3)

        goods only.

        services only.

        both goods and services.

        neither goods not services.

17. Currency traders expect the value of the dollar to fall. What effect will this have on the demand for dollars and the supply of dollars in the FOREIGN EXCHANGE market?(Points : 3)

Demand for dollars will increase, and supply of dollars will decrease.

Demand for dollars will increase, and supply of dollars will increase.

Demand for dollars will decrease, and supply of dollars will increase.

Demand for dollars will decrease, and supply of dollars will decrease.

18. What impact might an increase in the budget deficit have on interest rates and exchange rates? (Points : 4)

        Interest rates and exchange rates increase.

        Interest rates increase and exchange rates decrease.

        Interest rates decrease and exchange rates increase.

        Interest rates and exchange rates decrease.

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