Author Question: A temporary increase in government spending that leads to only a small decline in lifetime wealth ... (Read 140 times)

SGallaher96 · **on:** Jun 30, 2018

A temporary increase in government spending that leads to only a small decline in lifetime wealth likely shifts the output demand curve to the

A) right by more than the rightward shift in output supply.
B) right by less than the rightward shift in output supply.
C) left by more than the leftward shift in output supply.
D) left by less than the leftward shift in output supply.

Question 2

In the new classical model, stabilization policies

a. cannot affect output and employment in either the short run or the long run.
b. affect output and employment only in the short run.
c. have no effect on output and employment, even in the short run.
d. affect output and employment only in the long run.