Which of the following statements would be true for an economy that can be characterized as being to the right of its LM curve?
A) There is excess supply of money.
B) There is excess demand for money.
C) There will be a tendency for the level of output to increase.
D) There will be a tendency for the interest rate to decrease.
B
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Ricardian equivalence suggests that forward looking households ________ the future taxes required to pay off government debt, so that reductions in lump-sum taxes have ________ effect on the economy
A) fully anticipate; a multiplied B) fully anticipate; no C) are unaware of; a negative D) are unaware of; a positive
In real business cycle models and new classical models
a. monetary factors are responsible for fluctuations in output and employment. b. changes in unemployment are involuntary. c. markets always clear. d. prices and wages are perfectly flexible. e. none of the above.
Explain reasons that may make payments based on marginal productivity have widely varied results.
What will be an ideal response?
If a government must run a balanced budget, then tax revenues and government spending:
a. move roughly in opposite directions. b. move exactly in opposite directions. c. move exactly in the same direction. d. move roughly in the same direction.