occur if the go a. Aggregate demand will increase d. Aggregate demand will decre
ID: 1129441 • Letter: O
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occur if the go a. Aggregate demand will increase d. Aggregate demand will decrease 94. Assuming an economy is in long-run equilbium, have what short-run effect? an increase in aggregate demand would likely and inflation would increase b. Unemployment and inflation would decrease c. Unemployment would increase d. Unemploymen and inflation would increase t would decrease and inflation would increase 95.What is fiscal policy? a. Manipulating the money supply to achieve economic objectives in government spending and taxation to achieve economic objectives Changes in investment policy by the Fed d. c. A lowering of the price level to achieve economic objectives 96.Countercyclical policy are actions designed to a. Reduce the deficit during expans b. Maintain c. Increase exports during recessions d. Any governmental action directed at ensuring political stability high employment, stable prices, and economic growth 97. If u is above the natural rate, a correct mix of monetary and fiscal policy may be to a. Decrease the money supply and increase tax rates government spending and increase interest rates c. Increase the money supply and increase government spending d. Raise the discount rate and lower tax rates 98. Which of the following correctly depicts the relation among policles and targets? a. Policy goals drive policy instrument use b. Policy instruments affect operating targets which impact intermediate targets to achieve a policy goal ate goals determine which targets impact the policy instrument d. All of the above 99. The policy goal that the Fed is trying to achieve to reduce a negative output gap is a. Economic growth b. Ful c. Stable prices d. Increased exports yment 00. The correct policy instrument action taken by the Fed to reduce a negative output gap be a. Sell securities b. Buy securities c. Raise tax rates d. Lower the exchange rateExplanation / Answer
Ans93) A is the correct option. When government lowers the taxes on household, then household will spend more meaning consumption expenditure will increase which is a component of aggregate demand so aggregate demand will increase and will shift rightwards.
Ans94) D is the correct option. Unemployment would decrease and inflation would increase.
Increase in aggregate demand shifts AD to the right and since there is no change in aggregate supply price increases and output increases.
Ans95) B is the correct option. Changes in government spending and taxation to achieve economic objectives. Fiscal policy is the means by which a government adjusts its spending levels and tax rates to monitor and influence a nation's economy.
Ans96) B is the correct option. Maintain high employment stable prices and economic growth. Countercyclic policy is the government policy aimed at reducing or neutralizing anti-social effects of economic cycles.
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