Suppose that the government decreases spending more than is necessary to close an inflationary gap. What is the MOST likely result? Inflation will increase. The price level will increase. Aggregate output will fall short of potential output. Aggregate output will increase.
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- Income tax collections: Group of answer choices rise during a recession, thus reduce the severity of the recession. rise during a recession, thus increase the severity of the recession. fall during inflationary episodes, thus increase the severity of the inflation. fall during a recession, thus reducing the severity of the recession.In the short run, the increase in investment spending due to the new tax credit shifts the aggregate (supply, demand) curve to the (left right), causing the price level to (fall below, rise above) the price level people expected, and the quantity of output to (fall below, rise above) potential output. The investment tax credit will cause the unemployment rate to (fall below, rise above) the natural rate of unemployment in the short run.options: a contractionary fiscal a contractionary monetary a recessionary an expansionary fiscal an expansionary monetary an inflationary equal to greater than grew inflation less than receded the same as unemployment
- Automatic stabilizers have the effect of Group of answer choices eliminating all recessions. inflation. increasing the long-run supply curve. reducing recessionary gaps.When disposable income increases, consumption expenditure decreases by the same amount. does not change. also increases, and by an equal amount. also increases, but by less. also increases, and by more. Demand-pull inflation starts with a decrease in aggregate supply. a decrease in aggregate demand. an increase in aggregate demand. an increase in aggregate supply. an increase in potential GDP.The pandemic caused the economy to slow down. Which one of the following is correct to speed up recovery. a. Tax cuts, increase money supply, raise the interest rates. b. Tax cuts, increase money supply, increase government spending. c. Tax cuts, decrease money supply, raise the interest rates. d. Tax cuts, decrease money supply, increase government spending.
- Consumers increased consumption by a relatively small amount in 2008 and 2009 because they believed the tax cuts were temporary. True or FalseAggregate supply grows over time because of growing consumer and government spending. True or FalseIncreasing government purchases of goods and services would have a bigger multiplier effect on real GDP than decreasing taxes, dollar for dollar. Selected answer will be automatically saved. For keyboard navigation, press up/down arrow keys to select an answer. a b True False
- Increased government spending on interstate highways, public housing projects, and defense projects are all ways that the federal government can Question 37 options: a) shift the aggregate demand curve to the left b) shift the short-run aggregate supply curve to the left c) close a recessionary gap d) close an inflationary gapWhich statement below is true of ONLY fiscal policy? Uses government expenditures to create demand Increases the availability of money Used to alter AD A policy typically set by a banking authority. Choose correctly option explanation. But not copy paste from anywhere.According to the traditional Keynesian analysis, if the government increases spending and pays for all of it by raising current taxes, then a budget deficit will occur. a budget surplus will occur. aggregate demand will decrease. aggregate demand will increase.
