Expansionary fiscal policy to prevent real GDP from falling below potential real GDP would cause the inflation rate to be and real GDP to be O higher; higher O higher; lower O lower; higher O lower; lower
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- options:a contractionary fiscala contractionary monetarya recessionaryan expansionary fiscalan expansionary monetary an inflationaryequal to greater thangrew inflationless thanrecededthe same asunemploymentQUESTION 20 Consider an economy that is producing an aggregate output of Y2 shown in the figure below. The economy fäces can be closed by Aggregate price level which fiscal policy. LRAS SRAS AD2 AD1 AD Y2 Yp Y1 Real GDP Oa. an inflationary gap; expansionary O b-a recessionary gap; expansionary Oc a recessionary gap; contractionary O d an inflationary gap; contractionaryUnder what circumstances is the balance-budget philosophy pro-cyclical? Multiple Choice O O O O A balance budget will always be pro-cyclical. If the economy faces an inflationary gap and a budget deficit. If the economy faces a recessionary gap and a budget deficit. If the economy faces a recessionary gap and budget surplus.
- For this economy to produce Y1 and sustain it without inflationa) the price of oil must increase.b) the government must implement an expansionary fiscal policy.c) the government must implement an expansionary monetary policy.d) potential output must increase.1Why low rate inflation is considered necessary for economic grwoth? Oa It does not affect the purchasing power of wages Ob. It indicates that the currency is in continuous demand by the people Oc taffects only the rich and not the poor Od itact as an incentive to boost in supply in the economy 2When the economy is in Keynesian macroeconomic equilibrium, planned investment is greater than actual investment. O a False O b. True 3Government fixes the floor and ceiling price which will not allow the producers to increase the price on their wish, this is a type of. O a Physical control called price pegging O b. Monetary policy control measures O. Physical control called price tagging Od. Fiscal policy control measures O e None 4Rising output coupled with falling prices is called stagflation O a. False O b. True 5The Value of marginal propensity to consume lies O a. O to 1 O b. Less than zero Oc -1 to 1 Od. Between O to 1 6The Central Bank way to control inflation is Oa Monetary policy…What happens when the economy is in an inflationary gap? The money wage rate and real GDP OA. falls; decreases OB. rises; decreases OC. falls; increases OD. rises; increases
- When the economy is in a recession, tax revenue while spending increases and, as a result, aggregate demand O a. decreases; automatic; increases O b. decreases; discretionary; is not changed Oc. decreases; automatic; decrease O d. increases; induced; is not changed O e. increases; induced; decreasesCongratulationst You have been appointed an economic policy adviser to the United States, You are told that the economy is significantly abowe futtemplyoment GDP. Based on this inlormation, how can the economy would adjust to reach LR.SR Equilbrium (Classical View)? The economy wilt experience low unemployment rate, pushing wages up, and increasing the pelces of a key input (labor). shatting the sAS to the left (up). The economy will experience high unemployment rate, pushing wages down, and reducing the prices of a key input (labor). shiting the SAS to the right (down). The econoriny wil experience low unemployment rate, decreasing inceme, which will eventually shift the AD to the left. The eooncmy will experience low unemployment rate, pushing wages up, and increasing the prices of a key input (labor), shiting the sAs to the night (down).R MPA a MPB ISB ISA the Fed wilIN To prevent a Consider figure, if there is a sharp increase in consumer confidence, the economy will move from point and the economy moves from point O A. a to point d; recession; lower interest rates; d to point b O B. b to point a; bubble; raise interest rates; a to point d O C. d to point c recession; lower interest rates; c to point b O D.a to point d; recession; lower interest rates; d to pointc 12 O E. c to point b; bubble; raise interest rates; b to point C LG
- Economics How are aggregate output and the real interest rate determined in compettive egulbum? OA The aggregate oulput can be found by multiplying current employment by current real wage at the intesection of the current labour supply and demand curves, given the raal inderest rate. and ssubtracting the level of investment in the economy OB. Cument aggregata output and the real interest rate are determined by the intersection of the output supoly and demand ouves OC. Cunent aggregate output can be found by finding current employment from the intersection of the current labour supply and domand ourves given the real interest rate and aocounting tor total tactor productivity OD. The real interest rate is determined by the slope of the output supply curve at a given level of aggregate outputO a) A to B CF Ans Ski b) B to A O c) C to D d) D to C e) A to E O f) C to E Refer to the diagram. If the economy is in an inflationary gap, and the government uses restrictive fiscal or monetary policy to bring down prices, there will be a movement from point to point -- LRPC Prtential veal GoP SRPC
