Author Question: A permanent decrease in taxes leads to A) a small increase in current consumption. B) a large ... (Read 74 times)

strangeaffliction · **on:** Jun 30, 2018

A permanent decrease in taxes leads to

A) a small increase in current consumption.
B) a large increase in current consumption.
C) a small decrease in future consumption.
D) a large decrease in future consumption.

Question 2

In the monetary small open-economy model, a flexible exchange rate insulates the domestic price level from

A) both real and nominal shocks from abroad.
B) real shocks from abroad, but not from nominal shocks from abroad.
C) nominal shocks from abroad, but not from real shocks from abroad.
D) neither real nor nominal shocks from abroad.