What is the main difference between a demand shock stemming from monetary policy and a demand shock that comes from a change in spending?
A) In the short-run, an autonomous monetary policy easing lowers real interest rates and raises aggregate output whereas a positive spending shock has the opposite effect on both variables.
B) An autonomous monetary policy easing raises inflation permanently whereas a positive spending shock only raises inflation temporarily.
C) An autonomous monetary policy easing has a temporary effect on the real interest rate whereas a positive spending shock has a permanent effect on the real interest rate.
D) all of the above
E) none of the above
C
You might also like to view...
Which of the following statements correctly characterizes the colonial commodity trade deficit?
a. The Middle colonies had the largest commodity trade deficit. b. The Southern colonies exported more to Great Britain & Ireland than they imported. c. The colonies experienced commodity trade deficits not only in their trade with England, but also in trade with Southern Europe and Africa. d. The colonies had a commodity trade deficit with Great Britain, but a commodity trade surplus once all trades were taken into account.
Using Figure 1 above, if the aggregate demand curve shifts from AD1 to AD2 the result in the short run would be:
A. P1 and Y2. B. P3 and Y1. C. P2 and Y2. D. P2 and Y3.
When government outlays exceed tax revenue, the situation is called a budget
A) with a negative balance. B) deficit. C) surplus. D) debt. E) with no balance.
The free-rider problem is the reason way private markets are unlikely to achieve the efficient level of production of
A) normal goods. B) excludable goods. C) public goods. D) private goods.