A country's economy is close to full employment. The government then decides to launch a tax cut program. Simultaneously, the central bank launches a bond sale program of the same magnitude. What can we say about the country's aggregate product (Y), price level (P) and interest rate (i) in the short run? We can expect Y to increase, P to increase, and i to increase. O b. We can expect Y to remain unchanged, P to remain unchanged, and i to increase. O C. We can expect Y to remain unchanged, P to remain unchanged, and i to remain unchanged. Od. We can expect Y to decrease, P to decrease, and i to decrease. Oe. None of the alternatives is correct.

A country's economy is close to full employment. The government then decides to launch a tax cut program. Simultaneously, the central bank launches a bond sale program of the same magnitude. What can we say about the country's aggregate product (Y), price level (P) and interest rate (i) in the short run? We can expect Y to increase, P to increase, and i to increase. O b. We can expect Y to remain unchanged, P to remain unchanged, and i to increase. O C. We can expect Y to remain unchanged, P to remain unchanged, and i to remain unchanged. Od. We can expect Y to decrease, P to decrease, and i to decrease. Oe. None of the alternatives is correct.

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter16: The Influence Of Monetary And Fiscal Policy On Aggregate Demand

Section: Chapter Questions

Problem 8PA

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