If the intersection of the IS curve with the horizontal axis comes at a level of output below the natural level of output, the Fed
A) can easily bring the economy back to the full-employment level of output.
B) loses control of the economy.
C) must use contractionary model policy to correct economic problem.
D) must decrease money supply and ignore interest rates.
B
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If a "liberal" wanted to decrease aggregate demand, which of the following would she tend to favor?
a. An increase in government spending, because it will increase the size of the public sector. b. A decrease in government spending, because it keeps the public sector small. c. An increase in transfer payments, because it has a larger multiplier than tax changes. d. An increase in taxes, because it makes the public sector larger.
Increases in international trade and technological change have been offered as explanations for the
a. increase in demand for both skilled and unskilled workers in the United States. b. increase in demand for skilled workers and decrease in demand for unskilled workers in the United States. c. decrease in demand for skilled workers and increase in demand for skilled workers in the United States. d. decrease in demand for both skilled and unskilled workers.