QUESTION 7 Self-correcting mechanism of an economy can close a expansionary gap

Question

QUESTION 7

Self-correcting mechanism of an economy can close a expansionary gap even without government macroeconomic policy by

A.

Shifting AD to the right in the long run

B.

Shifting AD to the left in the short run

C.

Shifting SRAS to the right in the long run

D.

Shifting SRAS to the left in the long run

10 points   

QUESTION 8

Two major types of government macroeconomic policy are

A.

fiscal policy and industrial policy

B.

monetary policy and tariff policy

C.

foreign policy and defense policy

D.

fiscal policy and monetary policy

QUESTION 13

If the economy overheats, the self-correcting mechanism will

A.

Shift AD to the left in the long run

B.

Shift AD to the right in the long run

C.

Shift SRAS to the left in the long run

D.

Shift SRAS to the right in the long run

A.

Shifting AD to the right in the long run

B.

Shifting AD to the left in the short run

C.

Shifting SRAS to the right in the long run

D.

Shifting SRAS to the left in the long run

Explanation / Answer

7) The asnwer is D-) Shifting SRAS to the left in the long run

because an expansionary gap is when the actual output is greater than potential ouput. then the self correcting mechanhism decrease the aggreagte demand and lower the price level in the short run .

8) The answer is D-) Fiscal and Monetary policy.

9) The answer is A-) Shift AD to the left in the long run

because overheat of the economy , is when the economy productive capacity is unable to match the economy aggregate demand. so by shifting the AD to the left in the long run, the economy achives at its potential level of GDP .the AD will decrease.

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.