question archive 1) Suppose fiscal policy makers implement a policy to reduce a budget deficit
1) Suppose fiscal policy makers implement a policy to reduce a budget deficit
Subject:EconomicsPrice: Bought3
1) Suppose fiscal policy makers implement a policy to reduce a budget deficit. Which of the following would occur, assuming initially the economy produces the natural level of output
A) Output increases in the short run
B) Price expectation increases before the economy reaches the new medium-run equilibrium.
C) Real wage rate increases in the medium run.
D) investment spending increases in the medium run.
2. Which of the following statements is NOT correct?
A) Each AS curve is associated with one particular level of price expectations.
B) All points along the AS curve are short-run equilibrium points in the labor market.
C) Price expectations are always accurate along the AS curve.
D) Only one point along the AS curve is the medium run equilibrium in the labor market.
3.Which of the following statements is NOT correct?
A) Any shifts of the IS curve will shift the AD curve
B) Any shifts of the LM curve will shift the AD curve
C) Any shifts of the WS curve will affect the natural unemployment rate, assuming that Y=N.
D) Any shifts of the PS curve will affect the natural level of output, assuming that Y=N.
4. Which of the following will cause the money multiplier to become larger? A). an increase in high powered money.
B). an increase in the public’s preferences for checking deposits as opposed to holding currency.
C). a decrease in the discount rate
D). a decrease in the interest rate paid on reserves
