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Author Question: Suppose the economy is on the classical range of the aggregate supply curve and has a problem with ... (Read 256 times)

j.rubin

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on: Jun 30, 2018
Suppose the economy is on the classical range of the aggregate supply curve and has a problem with inflation. According to Keynesian theory, which of the following is an appropriate discretionary fiscal policy to use in this situation?
 a. A reduction in the money supply.
  b. Less government regulation.
  c. Increase federal spending.
  d. Higher taxes.

Question 2

A decrease in the money supply:
 a. raises the interest rate, causing an increase in investment and an increase in GDP.
  b. lowers the interest rate, causing an increase in investment and an increase in GDP.
  c. raises the interest rate, causing a decrease in investment and a decrease in GDP.
  d. lowers the interest rate, causing a decrease in investment and an increase in GDP.
  e. lowers the interest rate, causing a decrease in investment and a decrease in GDP.


at

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Reply #1 on: Jun 30, 2018
Answer to Question 1

d

Answer to Question 2

c


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