Author Question: If firms are more pessimistic and believe that future profits will fall and remain weak for the next ... (Read 18 times)

cookcarl · **on:** Jun 29, 2018

If firms are more pessimistic and believe that future profits will fall and remain weak for the next few years, then

A) investment spending will remain unaffected. B) investment spending will rise and then fall.
C) investment spending will rise. D) investment spending will fall.

Question 2

Refer to Figure 26-7. Suppose the economy is in short-run equilibrium above potential GDP, the unemployment rate is very low, and wages and prices are rising.

Using the static AD-AS model in the figure above, the correct Fed policy for this situation would be depicted as a movement from
A) A to B. B) B to C. C) C to D. D) C to B. E) A to E.