Author Question: If the shifts in AD that will result from policy changes are fully and accurately anticipated, a ... (Read 29 times)

pepyto · **on:** Jun 30, 2018

If the shifts in AD that will result from policy changes are fully and accurately anticipated, a decrease in government purchases or an increase in taxes would result in which of the following in the short run?
a. a higher level of real output and a higher price level
b. a higher level of real output but no change in the price level
c. a higher price level and a reduced level of real output
d. none of the above.

Question 2

Which of the following is an example of a speculative attack on a currency?
a. National governments decide to engage in competitive devaluations against a given country.
b. International organizations such as the WTO and the IMF attempt to reorder the currency's system.
c. Private investors sell domestic currency and buy foreign currency, betting that the domestic currency will soon be devaluated.
d. Casinos in Las Vegas allow the proliferation of bets for and against a given currency.
e. A country is at war, and the enemy country freezes all the accounts denominated in the local currency.