An increase in business taxes is assumed to increase aggregate supply, causing t

Question

An increase in business taxes is assumed to increase aggregate supply, causing the AS curve to shift to its right. M_1, which is one of the measures of money supply, includes currency in circulation, demand deposits, and time deposits. The slope of the straight- line graph, representing the consumption function, is called the marginal propensity to consume. The Phillips Curve is drawn as a downward sloping curve, showing an inverse relationship between inflation rate and unemployment rate. The Federal Reserve Bank is assumed to have been following a tight money policy, if it is buying US Treasury securities through open-market operations. According to the Productivity Approach, the Economic Growth is equal to growth in TFP plus growth in the amounts of labor and capital. The higher the value of MPS, the larger the site of the expenditure multiplier. The US banking system is based on fractional reserve requirement. In a given year, the Federal Budget is assumed to show a surplus if the Government Spending has exceeded Tax Revenue. Whereas the Monetary Policy affects the Economy directly, the Fiscal Policy affects it indirectly.

Explanation / Answer

Answers:

1). False

2). False

3). True

4). True

5). True

6). True

7). False

8) True

9). True

10). False

11). False

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