Which one of the following is not likely to occur during a typical economic (a)

Question

Which one of the following is not likely to occur during a typical economic (a) Automobile sales decrease. (b) Interest rates decrease. (c) Housing sales fall (d) The rate of inflation increases. 8. Explain the reason for your answer 9. The appropriate govemmental macroeconomic policies for dealing with a recession are a balanced budget, and increases in interest rates if necessary (a) (b) reductions in government spending to keep a balanced budget, and no change in interest rates. (c) federal budget deficits combined with increases in interest rates. (d) reductions in both interest rates and the federal government's debt. (e) increases in government spending, decreases in taxes, and lower interest rates. Explain the reason for your answer 10. Monetary and fiscal policies that push the economy close to "full employment tend to (a) reduce the rate of inflation (b) generate higher rates of inflation. (c) reduce government budget deficits and debt. (d) (a) and (c). Explain the reason for your answer. Government policies that reduce the rate of inflation will cause the unemployment rate t (a) decrease (b) not change. (c) increase. 11. Explain the reason for your answer. D3

Explanation / Answer

8. Option d.

During a typical economic recession the rate of inflation does not increase.

During recessions ,the inflation falls. It either drops or becomes negative, that is the prices of goods increases at lower rates.

9. Option e

The appropriate governmental macroeconomic policies for dealing with a recession are increases in government spending, decreases in taxes and lower interest rates.

Increased government spending will help in dealing with recession, loosening of monetary policy by cutting interest rates and taxes also Help in dealing with recession.

10. Option b.

Monetary and fiscal policies that push the economy close to full employment tend to generate higher rates of inflation.

As demand increases, rates of inflation becomes greater which pushes the economy towards full employment in an attempt to reduce the interest rates.

11. Option a.

Government policies that reduce the rate of inflation will cause the unemployment rate to decrease.

Government policy called the fiscal policy decreases unemployment rate by increasing aggregate demand and rate of economic growth.

While monetary policy cuts the interest rates which increases aggregate demand and also the GDP which decreases unemployment.

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