5.3

Question 1

demand is how fiscal and monetary policy affects

Answer 1

real GDP and price level

Question 2

equilibrium expenditure and real GDP depend on

Answer 2

interest rate

Question 3

is inversely related to the interest rate

Answer 3

investment

Question 4

investment will increase as price of money

Answer 4

falls

Question 5

given the equilibrium price of money determined in the money money there will be a specific level of

Answer 5

investment

Question 6

investment is part of ______ including ________

Answer 6

• autonomous expenditure

- government spending and exports

Question 7

increases from point of intersection between AE curve and x-axis, at a slope reflecting the MPc

Answer 7

induced expenditure

Question 8

measured by intersection of AE curve and x-axis depending on level of investment determined by interest rate which is determined by equilibrium in the money market

Answer 8

autonomous expenditure

Question 9

fiscal policy and aggregate demand assume government pursues

Answer 9

expansionary fiscal policy

Question 10

Fiscal Policy and AD: 1rst round

Answer 10

increase in G and shifts AD curve to the right

Question 11

FP and AD: 1rst round has a ____n price level and _____ real GDP

Answer 11

higher

higher

Question 12

FP and AD: 2nd rounds

Answer 12

increase in real GDP increases demand fro money M1 to M2

Question 13

increased demand for money _____ interest rate ______ income causing AD to shift

Answer 13

raises
decreasing
left

Question 14

gov. borrowing on the financial markets will reduce investment through

Answer 14

crowd sourcing

Question 15

government borrowing ______ money demand _______ interest rates causing investment to _____

Answer 15

increases
raising
fall