Refer to the information provided in Figure 32.2 below to answer the question(s) that follow.
Figure 32.2Refer to Figure 32.2. According to the new classical economists, under rational expectations an expected decrease in taxes would
A. shift AD1 to the left.
B. shift AD1 to the right.
C. shift AS1 to the right.
D. not change AD or AS.
Answer: D
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From the late 1860s until 1907 the U.S. averaged a four percent or more increase in the real value of the goods and services produced
Indicate whether the statement is true or false
The optimal decision rule is less than unanimity
a. True b. False
The catch-up effect refers to the idea that
a. saving will always catch-up with investment spending. b. it is easier for a country to grow fast and so catch-up if it starts out relatively poor. c. population eventually catches-up with increased output. d. if investment spending is low, increased saving will help investment to "catch-up."
Which of the following will reduce the effectiveness of centralized economic planning?
A) The central planners spending the funds of taxpayers will make poorer investment choices than investors spending their own money. B) The central planners will be unable to obtain sufficient information for a sound economic plan in a world of dynamic change. C) All of the above. D) The choices of the central planners will be influenced by political, rather than economic, considerations.