A congressman states, "If a government attempts to increase employment through increased government spending, all we will end up with is a higher price level." This congressman assumes that the
A) aggregate demand curve is a horizontal line.
B) aggregate demand curve is a vertical line.
C) aggregate supply curve is a horizontal line.
D) aggregate supply curve is a vertical line.
D
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Without someone actually coming into the bank to demand a loan, there is no process of money creation
Indicate whether the statement is true or false
Assume that the central bank sells government securities in the open market. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the real GDP and current international transactions in the context of the Three-Sector-Model? State your answer after the macroeconomic system returns to complete equilibrium
a. Real GDP falls and the current international transactions balance becomes more negative (or less positive). b. Real GDP rises and the current international transactions balance becomes more negative (or less positive). c. Real GDP and the current international transactions balance remain the same. d. Real GDP rises and the current international transactions balance remains the same. e. There is not enough information to determine what happens to these two macroeconomic variables.
When the Federal Reserve uses open-market operations to raise the Federal funds rate several times over a year, it is pursuing:
a. A Taylor rule policy b. An expansionary money policy c. A prime interest rate policy d. A restrictive money policy
If the marginal rate of substitution is not diminishing, it must mean that tastes violate convexity (assuming that our other assumptions about tastes hold).
Answer the following statement true (T) or false (F)