Most economists agree that
A. active policymaking is unlikely to exert sizable long-run effects on real Gross Domestic Product (GDP).
B. passive policymaking is likely to exert sizable long-run effects on real Gross Domestic Product (GDP).
C. active policymaking is likely to exert sizable long-run effects on real Gross Domestic Product (GDP).
D. none of these
Answer: A
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When there is a recessionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; decline B. increase; raise; decline C. decline; lower; expand D. decline; raise; decline
If the investment curve is relatively flat, the Keynesian conclusion is that the transmission mechanism has little effect on the economy
a. True b. False Indicate whether the statement is true or false
Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential B. expansionary; higher; potential C. recessionary; lower; potential D. recessionary; lower; lower
An expansionary fiscal policy can be illustrated by a(n):
A. increase in aggregate demand. B. increase in aggregate supply. C. decrease in aggregate demand. D. change in the price level.