Author Question: Assume that the government decides to use fiscal or monetary policy to stimulate the economy and ... (Read 48 times)

Capo · **on:** Jun 30, 2018

Assume that the government decides to use fiscal or monetary policy to stimulate the economy and that this action comes as a surprise to most individuals and businesses. In the short run, the result will be

A) an increase in aggregate demand and a fall in the price level.
B) a decrease in aggregated demand and a rise in the price level.
C) a decrease in the average duration of unemployment and a decrease in the unemployment rate.
D) an increase in the average duration of unemployment and an increase in the unemployment rate.

Question 2

A person keeps 500 in his home in order to be prepared for some unforeseen future event. This reflects his

A) speculative demand for money. B) asset demand for money.
C) liquidity demand for money. D) precautionary demand for money.