Refer to Figure 27-5. In the dynamic model of AD-AS in the figure above, if the economy is at point A in year 1 and is expected to go to point B in year 2, Congress and the president would most likely pursue
A) contractionary automatic stabilizers.
B) expansionary fiscal policy.
C) contractionary fiscal policy.
D) expansionary monetary policy.
E) contractionary monetary policy.
B
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A primary emphasis of the Keynesian school is the economy:
a. has a tendency to always create a full-employment level of output. b. has a tendency to always create inflationary pressure at all levels of output. c. has a tendency to eliminate unemployment by lowering wage rates to create an equilibrium in the labor market. d. is driven by the supply-side of the market. e. has a tendency to be in equilibrium at less than full employment.
In 2008, consumers were mailed a stimulus check in response to the recession. The result showed that Ricardian equivalence:
A. held, as most people spent a substantial share of the money. B. failed to hold, as most people spent a substantial share of the money. C. held, as most people saved the money. D. failed to hold, as most people saved the money.