Question

34) Which of the following is a false statement?

An expansion/ boom can be stabilized/fixed by following expansionary fiscal policy.

Expansionary monetary policy used to fix stagflation can worsen the problem of inflation.

A boom can be stabilized/fixed by following contractionary monetary policy.

Recession caused by a negative demand shock is fixed by an expansionary monetary policy.

36) Real Estate Boom is an example of

Negative supply shock

Negative Demand Shock

Positive Supply shock

Positive Demand shock

37) A large reduction in oil prices will cause:

a leftward shift in the aggregate supply curve.

a rightward shift in the aggregate supply curve.

a leftward shift in the aggregate demand curve.

a rightward shift in the aggregate demand curve.

41) Which of the following is NOT a fiscal policy action?

lowering income tax rates.

raising the quantity of money in circulation

increasing government expenditures on military hardware

decreasing government spending on the arts

42) Which of the following definitions is INCORRECT?

Administrative lag: The time it takes for policy to be effective

Operational lag: outside lag: The time it takes for policy to be effective.

Administrative lag: The time it takes to administer a policy

Recognition lag: the time it takes to recognize that a business cycle has started.

Answer 1

34) An expansion/ boom can be stabilized/fixed by following expansionary fiscal policy. This is because when there is an expansion, a contractionary policy is required

36) Positive demand shock because it is likely to raise GDP and price level by shifting AD to the right

37) A rightward shift in the aggregate supply curve because cost of manufacturing of goods and services would decline, allowing firms to produce more.

41) Raising the quantity of money in circulation because it is a monetary policy action

42) Administrative lag: The time it takes for policy to be effective