Assume the economy faces high unemployment but stable prices. Which combination of government policies is most likely to reduce unemployment?
A. The purchase of government securities in the open market and an increase in taxes
B. The sale of government securities in the open market and a decrease in taxes
C. The sale of government securities in the open market and a decrease in government spending
D. The purchase of government securities in the open market and an increase in government spending
D. The purchase of government securities in the open market and an increase in government spending
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Suppose that the IS curve is stable and money demand is lower than forecasted
If the Fed is targeting the interest rate, it notices the rate is ________ its target, and action to correct this, shifting the LM curve to the ________, causes GDP to ________ natural GDP. A) below, right, fall back toward B) below, right, rise further from C) below, left, return to D) above, left, fall back from E) above, right, rise further from
Consumer surplus:
a. does not exist in equilibrium. b. is illustrated by the area under the demand curve and above the market price. c. is illustrated by the area under the demand curve and below the market price. d. is illustrated by the area above the supply curve and under the demand curve.