If a 200 billion dollar increase in government spending occurs when the Fed seeks to maintain a fixed interest rate then
A) there is no crowding out, the LM curve shifts to offset the shift in the IS curve.
B) there is no crowding out, the monetary policy is fixes as is the LM curve fixed.
C) crowding out is assured since monetary policy is fixed.
D) crowding out is assured since the Fed will accommodate the spending increases.
A
You might also like to view...
The figure above shows a monopolistically competitive firm in the short run. During the transition to the long run, the demand curve will shift ________ and the MR curve will shift ________
A) leftward; leftward B) leftward; rightward C) rightward; leftward D) rightward; rightward
The Gibson Paradox shows that:
a. Central banks face a paradox when they want to stimulate their economies because consumers may not spend the newly created money. b. When monetary policy is loose and expected inflation rises, the nominal interest rate rises rather than falls. c. When fiscal policy is loose (i.e., high government spending and falling tax rates), society as a whole is more willing (not less willing) to give up consumption today for consumption in the future. d. When expected inflation rises, nominal interest rates fall rather than rise. e. When expected inflation falls, government spending tends to increase, rather than decrease, as is frequently assumed.
Most of the low-income economies have a fertility rate below 2.2 births per woman
Indicate whether the statement is true or false
The framers of the U.S. Constitution sought to design a political system that would
A) limit the powers of the federal government and protect the rights of individuals. B) provide the federal government with virtually unlimited power to promote the general welfare. C) promote efficiency through central planning of the economy. D) be based on majority rule.