Which of these is most likely to result when a demand-management policy is used in an economy that is experiencing stagflation?
a. A decrease in investment spending
b. An increase in the rate of inflation
c. An increase in unemployment
d. A decrease in the rate of inflation
e. A decrease in real GDP
b
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An example of a capital good is
A) a fiber optic cable TV system. B) an insurance policy. C) a haircut. D) an iPod. E) a slice of pizza.
Based on our understanding of the model presented in Chapter 3, we know that a reduction in c1 (where C = c0 + c1YD) will cause
A) the ZZ line to become steeper and a given change in autonomous consumption (c0 ) to have a smaller effect on output. B) the ZZ line to become steeper and a given change in autonomous consumption (c0 ) to have a larger effect on output. C) the ZZ line to become flatter and a given change in autonomous consumption (c0 ) to have a smaller effect on output. D) the ZZ line to become flatter and a given change in autonomous consumption (c0 ) to have a larger effect on output.