A flat LM curve implies that
A) an increase in government spending will change output by a relatively small amount.
B) a decrease in taxes will change output by a relatively small amount.
C) changes in government spending and taxes will have a large multiple effect on output.
D) A and B.
C
You might also like to view...
The market for airplane service on a particular route is a commonly cited example of
a. resale price maintenance. b. monopolistic competition. c. the benefits of vertical integration. d. a contestable market.
Happyland is a country devoted to consumption. The inhabitants spend all of their income on pleasurable things and virtually none on capital investment, human or otherwise. Seriousland is frugal, spending very little on consumption and a great deal on human and physical capital. Ten years from now, which country would you prefer to inhabit?
An elasticity of 2 would be considered
A. elastic. B. inelastic. C. unit elastic. D. undefined.
When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; expand B. increase; raise; decline C. decline; lower; decline D. decline; raise; decline