Fiscal policy is the manipulation of government spending and taxes
a. True
b. False
Indicate whether the statement is true or false
True
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If the short-run aggregate supply curve is positively sloped and the Fed increases the money supply, aggregate demand: a. falls, which increases real GDP and the price level
b. increases, which decreases real GDP and the price level. c. falls, which decreases real GDP and increases the price level. d. increases, which decreases real GDP and increases the price level. e. increases, which increases real GDP and the price level.
Samuelson and Solow, in their 1960 study of the Phillips curve as it applies to the U.S. experience, argued that there was a tradeoff between inflation and unemployment. Later experience showed their analysis to be
A) entirely correct in every situation. B) generally correct, but it could not explain stagflation. C) wholly wrong in every situation. D) in general agreement with rational expectations theory. E) capable of explaining stagflation, but not other economic scenarios.