Based on the figure below. Starting from long-run equilibrium at point C, a decrease in government spending that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at__ creating _____gap.
A. B; no output
B. D; an expansionary
C. B; recessionary
D. D; a recessionary
Answer: D
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Economists Eichengreen and Hausmann coined the phrase original sin to describe developing countries inability to borrow in their own currencies. Where do they believe that this inability comes from? What are other beliefs on this topic?
What will be an ideal response?
A period when the economy shrinks is known as
A. a slump. B. a recession. C. a contraction. D. all of the above.
Which of the following statements is true?
A. One benefit with any fixed-bundle index as a measure of the cost of living is that it does not account for substitutions that consumers might make in response to price changes. B. The consumer price index somewhat understates changes in the cost of living. C. The producer price index is considered to be a leading indicator of future inflation rates. D. The best overall indicator of inflationary pressures in the economy is the CPI.
If you were to use an Aggregate Supply - Aggregate Demand diagram to model nondiscretionary and discretionary fiscal policy in reaction to a positive aggregate demand shock, you would seethe aggregate demand curve move
A. to the right, back toward its pre-shock position as a result of these policies. B. to the left as a result of the shock. C. back toward its pre-shock position as a result of these policies. D. to the right as a result of the shock.