Keynesian policy suggests that if inflationary rises in the price level are a concern, the response would be contractionary fiscal policy, using tax increases or government spending cuts to shift AD to the left. What would the result be in this scenario?
a. The result would be downward pressure on the price level, very little reduction in output but a large rise in unemployment.
b. The result would be downward pressure on the price level, but very little reduction in output or very little rise in unemployment.
c. The result would be downward pressure on the price level, a large reduction in output but very little rise in unemployment.
d. The result would be downward pressure on the price level, but a large reduction in output and a large rise in unemployment.
b. The result would be downward pressure on the price level, but very little reduction in output or very little rise in unemployment.
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Answer the next question based on the given supply and demand data for wheat.Bushels Demanded Per monthPrice per BushelBushels Supplied Per Month45$57750473563686126167157If the price in this market was $4
A. the market would clear; quantity demanded would equal quantity supplied. B. there would be a shortage of wheat. C. buyers would want to purchase more wheat than is currently being supplied. D. farmers would not be able to sell all their wheat.
A situation in which a single individual can provide a private good is known as the volunteer's dilemma
Indicate whether the statement is true or false
In which model does there not exist a tradeoff between higher inflation and lower unemployment?
a. monetarist b. real business cycle c. new classical d. classical e. a tradeoff exists in all of the above
When we say that one of the functions of the Fed is to be a lender of last resort, we mean that the Fed:
A. provides funds to troubled banks that cannot find any other source of funds. B. serves as a clearinghouse for interbank payments. C. sets reserve requirements.