MCQs of Economics – Macroeconomic Policy Tools

Keyness liquidity preference theory of the interest rate suggests that the interest rate is determined by:

When money demand is expressed in a graph with the interest rate on the vertical axis and the quantity of money on the horizontal axis an increase in the interest rate:

When supply and demand for money are expressed in a graph with the interest rate on the vertical axis and the quantity of money on the horizontal axis an increase in the price level

For the Eurozone countries, the most important source of the downward slope of the aggregate demand curve is probably:

In the market for real output, the initial effect of an increase in the money supply is to:

The initial effect of an increase in the money supply is to:

The long-run effect of an increase in the money supply is to:

Suppose a wave of investor and consumer pessimism in the USA causes a reduction in spending If the US federal Reserve (Which has a broader remit than the Bank of England Which is charged only with controlling inflation) chooses to engage in activist stabilization policy it should:

The initial impact of an increase in government spending is to shift:

If the marginal propensity of consume MPC is 0.75 the value of the multiplier is:

An increase in the marginal propensity to consumer (MPC):

Suppose a wave of investor and consumer optimisms has increased spending so that the current level of input exceeds the long-run natural rate If policy makers choose to engage in activist stabilization policy they should:

When an increase in government purchases raises incomes shifts money demand to the right raises the interest rate, and lowers investment we have seen a demonstration of:

Which of the following statements regarding taxes is correct?

Suppose the government increases its purchases by Rs16 billion. If the multiplier effect exceeds the crowding out effect then:

When an increase in government purchases increases the income of some people, and those people spend some of that increase in income on additional consumer goods, we have ween a demonstration of

Which of the following is an automatic stabilizer?

Which of the following statements about stabilization policy is not true?

Which of the following best describes how an increase in the money supply shift the aggregate demand curve?