In an aggregate demand and aggregate supply graph, a contractionary fiscal policy can be best illustrated by a:
A. rightward shift in the aggregate supply curve.
B. movement along an existing aggregate supply curve.
C. leftward shift in the aggregate demand curve.
D. rightward shift in the aggregate demand curve.
Answer: C
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Starting from long-run equilibrium, a war that raises government purchases results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; potential C. higher; higher D. lower; higher
How does a budget deficit lead to a trade deficit?
a. The trade deficit triggers higher interest rates, which increase the budget deficit. b. The budget deficit leads to higher interest rates and exchange rates, which shrink net exports. c. The trade deficit causes lower interest rates, which leads to economic recession and a budget deficit. d. The budget deficit causes lower exchange rates, which decrease net exports.
In an economy, 180 million workers are employed out of a labor force of 200 million and a total population of 310 million. The unemployment rate is:
a. 3.1 percent b. 1.85 percent c. 10 percent d. 5 percent
Exhibit 21-6 Dollars per British pound QuantityDemanded Dollarsper Pound QuantitySupplied 200 5 600 240 4 480 300 3 410 360 2 360 390 1 330 In Exhibit 21-6, when the exchange rate is 3 dollars per pound, there is an excess
A. supply of 110 pounds. B. demand of 110 pounds. C. supply of 110 dollars. D. demand of 110 dollars.