(Last Word) In response to the Great Recession, the federal government engaged in significant deficit-funded spending, but it did not fully achieve the desired result. Which of the following best explains why the fiscal policy actions fell short of their
objective?
A. Monetary policy counteracted fiscal policy, keeping the unemployment rate from falling as
much as intended.
B. Consumers did not respond to the fiscal stimulus as well as hoped, as they put more
income into saving and repaying debt.
C. Although the fiscal stimulus increased consumer spending significantly, it mostly went to
purchase foreign-produced goods and services.
D. The fiscal stimulus caused massive inflation that further disrupted economic activity.
B. Consumers did not respond to the fiscal stimulus as well as hoped, as they put more
income into saving and repaying debt.
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Of the following, the largest component of GDP is
A) personal consumption expenditure. B) gross private domestic investment. C) government expenditure on goods and services. D) net exports of goods and services.
In the Keynesian model in the long run, an increase in the money supply will cause
A) an increase in output and a decrease in the real interest rate. B) a decrease in the real interest rate but no change in output. C) an increase in the real interest rate and an increase in output. D) no change in either the real interest rate or output.
To remedy the problem faced by low-skilled job seekers, more attention must be paid to the level of demand, not the structure of demand
Indicate whether the statement is true or false
Refer to the above figure. A long-run equilibrium in monopolistic competition is pictured by
A) Panel A. B) Panel B. C) Panel C. D) Panel D.