QUESTION 19 the a. lead to an increase in investment b. increase disposable inco

Question

QUESTION 19 the a. lead to an increase in investment b. increase disposable income. c. decrease disposable income. d. have no effect on disposable income e. lead to a reduction in government spending. QUESTION 20 Suppose an economy had an inflation rate of 7 percent last year. This has decreased to 6 percent this year. This means that the economy is: a. suffering from hyperinflation. , b. experiencing a decrease in real wage. c. experiencing disinflation. d exper e. experiencing deflation QUESTION 21 If policy makers think the natural rate of unemployment is lower than it really is, then their policies designed to move the economy to the estimated natural rate, if continued over the long run, will: a. keep the economy below its potential GDP level. -b. shift the long-run aggregate supply curve to the right. c. lead to a lower price level. d. cause continuing inflation. e. shift the supply curve of labor to the right. Click Save and Submit to save and submir. Clhck Save All Answers to save all ansuers

Explanation / Answer

19. c

Increase in tax reduces after tax incomes .

20. e

Fall in inflation is deflation.

21. b

Shifting natural rate of output from low to high level will increase the he long run aggregate supply curve

22. e

Income effect tells us how change in income due to price change will affect quantity demanded.

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