As the aggregate demand curve shifts leftward along a given aggregate supply curve,
a. unemployment is higher and inflation is lower.
b. unemployment is lower and inflation is higher.
c. unemployment and inflation are higher.
d. unemployment and inflation are lower.
Disinflation is defined as a
a. zero rate of inflation.
b. negative rate of inflation.
c. constant rate of inflation.
d. reduction in the rate of inflation.
Critics of stabilization policy argue that
a. active monetary policy is necessary for steady economic growth.
b. active fiscal policy is required for steady economic growth.
c. the lag problem ends up being a cause of economic fluctuations.
d. âanimal spiritsâ must be offset by active monetary policy.
As real GDP falls,
a. money demand rises, so the interest rate falls
b. money demand falls, so the interest rate falls.
c. money demand rises, so the interest rate rises.
d. money demand falls, so the interest rate rises.
Initially, the economy is in long-run equilibrium. Aggregate demand then shifts leftward by $50 billion. The government wants to increase its spending in order to avoid a recession. If the crowding-out effect is always one-third as strong as the multiplier effect, and if the MPC equals 0.6, then by how much do government purchases have to increase in order to offset the $50 billion leftward shift?
a. by $90 billion
b. by $30 billion
c. by $60 billion
d. by $20 billion
Explain the last question
Answers
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Posted 03 May 2017 03:05 AM
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