Political business cycles result:
a. from the economic fluctuations that occur when discretionary policy is manipulated for political gain.
b. from the recessionary gap that occurs when output falls short of the economy's potential
c. from the expansionary gap that occurs when output exceeds the economy's potential.
d. when the spending multiplier is manipulated for political gain.
e. from the economic fluctuations that occur when automatic stabilizers are manipulated for political gain.
a
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Research supporting the new Keynesian model finds that prices are ________
A) slow to adjust to aggregate demand shocks B) changed very frequently C) changed only infrequently D) not as flexible as wages
Refer to Figure 2. All else equal, a major paper manufacturer filing for bankruptcy and shutting down as a result of an IRS tax evasion investigation would cause a move from
a. x to y. b. y to x. c. SA to SB. d. SB to SA