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1. (#5 2010) Which of the following is an example of fiscal policy? A) Increasing government expenditures to build highways B) Increasing the money supply to increase income C) Decreasing the discount rate to lower unemployment and inflation D) Decreasing the federal funds rate to stimulate investment E) Decreasing the reserve ratio to increase bank 2. (#8 2010) Aggregate demand may be measured by adding (A) Consumption, investment, savings and imports (B) savings, government spending, and business inventories (C) consumption, investment, government spending, and net export (D) domestic private expenditures and government spending (E) domestic expenditures and imports 3. (#9 2010) According to the short-run Phillips curve, a decrease in unemployment is expected to be accompanied by (A) higher labor-force participation (B) an increase in inflation (C) an increase in the productivity of capital (D) an increase in the government deficit (E) a decrease in real gross domestic product 4. (#12 2010) Which of the following is true about the national debt of the United States? (A) It is the debt owed to foreign investors (B) It is the accumulation of past and current (C) increases when gross domestic product increases. D) It increases when exports decrease, and decreases when exports increase E) It did not exist before 1980 5. (#21 2010) If marginal business tax rates are decreased, how will aggregate supply and employment change in the long run? Aggregate Supply Employment A) Increase Increase B) Increase Decrease C) Decrease Increase D) Decrease Decrease E) Not Change Increase 6. (#27 2010) Crowding out occurs when (A) increases in government spending

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