Question

QUESTION 4

Scenario A:

The national economy is sluggish as a result of tight money policies over the past two years.

Question:

In which direction would you change each fiscal policy tool in order to help the economy? For government spending would you increase or decrease it?

    a.  
Increase
    b.  
Decrease

QUESTION 5

Scenario A:
The national economy is sluggish as a result of tight money policies over the past two years.
Question:
In which direction would you change each fiscal policy tool in order to help the economy?Would you increase or decrease taxes?
    a.  
Increase
    b.  
Decrease

QUESTION 6

Scenario A:
The national economy is sluggish as a result of tight money policies over the past two years.
Question:
In which direction would you change each monetary policy tool in order to help the economy? Would you increase or decrease the Required Reserve Ratio?
    a.  
Increase
    b.  
Decrease

QUESTION 7

Scenario A:

The national economy is sluggish as a result of tight money policies over the past two years.

Question:

In which direction would you change each monetary policy tool in order to help the economy? Would you increase or decrease the Discount Rate?

    a.  
Increase
    b.  
Decrease

QUESTION 8

Scenario A:

The national economy is sluggish as a result of tight money policies over the past two years.

Question:

In which direction would you change each monetary policy tool in order to help the economy? For Open Market Operations, would you buy bonds or sell bonds?

       
Buy Bonds
       
Sell Bonds

QUESTION 9

Scenario A:

The national economy is sluggish as a result of tight money policies over the past two years.

Question:

What is the desired effect of each proposed policy in terms of changing Aggregate Demand (AD)?

    a.  
Increase AD
    b.  
Decrease AD
    c.  
Leave AD unchanged

QUESTION 10

Scenario A:

The national economy is sluggish as a result of tight money policies over the past two years.

Question:

Are the proposed policies contractionary or expansionary?

    a.  
Contractionary
    b.  
Expansionary

Answer 1

4.

Increase

Government spending will increase, to stimulate the demand.

5.

Decrease

Taxes will be decreased, because there will be tax multiplier set and people will spend more money, that was saved due to lower tax rates.

6.

Decrease

Required reserve ratio, will decrease, because it will make more money available for the loans. So, it is the part of expansionary monetary policy.

7.

Decrease

Discount rate will be decreased to increase the consumption and investment expenditure.

8.

Buy bonds

It will inject money into the economy and economy will be revived.

9.

Increase AD

All the proposed policy will stimulate the AD and it will increase.

10.

Expansionary