9- When expectations are taken into account, a policy to reduce budget deficit may not lead to a fall in output in thecurrent period. Which of the followings cannot be listed as factor that offsets the detrimental impact of fiscalcontraction on the output in the short run?a) O Increasing tax rates harshly to finance deficit.b) O Credibility of the deficit reduction program.c) O Cutting wasteful spending and leaving room for future tax cuts.d) O Backloading the deficit reduction, leaving larger cuts in government spending to the future while only small cutstoday.11 - Suppose government implements an unexpected tax increase. However, as a result of that unexpected fiscalcontraction, the central bank worries about "recession" and plans to respond that by reducing the policy rate. Giventhis information, we would expect thata) Oif output remain unchanged, this policy will have an ambiguous effect on stock prices.b) O if output remain unchanged, stock prices will rise.c)O if output remain unchanged, stock prices will remain constant.d) O if output remain unchanged, stock prices will decrease.

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9- When expectations are taken into account, a policy to reduce budget deficit may not lead to a fall in output in the current period. Which of the followings cannot be listed as factor that offsets the detrimental impact of fiscal contraction on the output in the short run? a) O Increasing tax rates harshly to finance deficit. b) Credibility of the deficit reduction program. C)O Cutting wasteful spending and leaving room for future tax cuts. d) O Backloading the deficit reduction, leaving larger cuts in government spending to the future while only small cuts today.

9- When expectations are taken into account, a policy to reduce budget deficit may not lead to a fall in output in the current period. Which of the followings cannot be listed as factor that offsets the detrimental impact of fiscal contraction on the output in the short run? a) O Increasing tax rates harshly to finance deficit. b) Credibility of the deficit reduction program. C)O Cutting wasteful spending and leaving room for future tax cuts. d) O Backloading the deficit reduction, leaving larger cuts in government spending to the future while only small cuts today.

Principles of Economics (MindTap Course List)

8th Edition

ISBN:9781305585126

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter36: Six Debates Over Macroeconomic Policy

Section: Chapter Questions

Problem 3PA

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13. If decision makers adjust fully to demand stimulus policies, persistent expansionary macro-policy will lead to Group of answer choices -inflation with no lasting reductions in unemployment. -a permanent reduction in unemployment. -lower interest rates. -more rapid economic growth.
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13. If decision makers adjust fully to demand stimulus policies, persistent expansionary macro-policy will lead to Group of answer choices -inflation with no lasting reductions in unemployment. -a permanent reduction in unemployment. -lower interest rates. -more rapid economic growth. Which is correct?
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