In the basic Keynesian model, a decline in autonomous spending:
A. increases potential output.
B. reduces potential output.
C. increases short-run equilibrium output.
D. reduces short-run equilibrium output.
Answer: D
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If the labor market in the above figure is competitive, what is the equilibrium wage and quantity of labor hired?
A) $10 and 100 hours B) $10 and 50 hours C) $5 and 100 hours D) $15 and 50 hours
Countries that have indexed most contracts, wages, and interest rates to inflation have managed to sustain solid levels of economic growth for sustained periods with levels of inflation at ________, which would sound high by recent U.S. standards.
a. 10 percent to 30 percent per year b. 30 percen to 40 percent per year c. 5 percent to 10 percent per year d. 40 percent to 50 percent per year
In 1995 House Speaker Newt Gingrich threatened to send the United States into default on its debt. During the day of this announcement, U.S. interest rates rose and the real exchange rate of the U.S. dollar depreciated. Which of these changes is consistent with the results of the open-economy macroeconomic model?
a. the increase in U.S. interest rates b. the depreciation of the real exchange rate of the U.S. dollar c. Both a and b are consistent. d. Neither a nor b are consistent.
The time it takes the Fed to formulate a policy is referred to as:
A. the inside lag for monetary policy. B. the inside lag for fiscal policy. C. the outside lag for monetary policy. D. the outside lag for fiscal policy.