According to the rational expectations school, if the Fed announces a policy of rapid growth in the money supply, but then puts the brakes on money expansion without any announcement, which of the following is likely to be the short-run result?
a. An unexpected surge in aggregate demand
b. An unexpected drop in aggregate demand.
c. An anticipated surge in aggregate demand.
d. An anticipated drop in aggregate demand.
e. No change in aggregate demand.
b
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Refer to Table 18-3. The table above outlines the rankings of three members of the U.S. Senate on three spending alternatives
Assume that Congress can spend additional revenue on only one of the three spending alternatives and that Bart, Lisa, and Maggie, all members of the Senate, participate in a series of votes in which they are to determine which of the spending alternatives should receive funding. Three votes will be taken: (1 ) Immigration Reform and Unemployment Benefits (2 ) Immigration Reform and Social Security Reform and (3 ) Unemployment Benefits and Social Security Reform.
In an open economy under flexible exchange rates and represented by the IS-LM-IP model, a reduction in government spending will cause a reduction in which of the following?
A) net exports B) the exchange rate, E C) exports D) all of the above E) none of the above