Author Question: In a two-period model with production, a temporary increase in domestic government spending A) ... (Read 97 times)

laurencescou · **on:** Jun 30, 2018

In a two-period model with production, a temporary increase in domestic government spending

A) increases domestic output and increases the current account surplus.
B) increases domestic output and decreases the current account surplus.
C) decreases domestic output and increases the current account surplus.
D) decreases domestic output and decreases the current account surplus.

Question 2

In the new Keynesian model, if an aggregate demand increase is anticipated, then ________.

A) aggregate demand will not change
B) short-run aggregate supply will shift up immediately
C) short-run aggregate supply will shift down immediately
D) there is no immediate effect on the short-run supply curve