If there is a constitutional requirement to maintain a balanced budget, then dur

Question

If there is a constitutional requirement to maintain a balanced budget, then during a recession when tax revenues are shrinking, the government will have to implement:

Answer

Contractionary fiscal policy

No change in fiscal policy

Expansionary fiscal policy

Countercyclical fiscal policy

QUESTION 15

Which short-run version of aggregate supply assumes that product prices are:

Answer

Fixed while resource prices are flexible

Flexible while resource prices are fixed

Both input and product prices are flexible

Both input and product prices are fixed

QUESTION 6

Demand-pull inflation is illustrated in the short run aggregate supply-aggregate demand model as a shift of the aggregate:

Answer

Supply to the right

Supply to the left

Demand to the right

Demand to the left

Explanation / Answer

Contractionary fiscal policy

Flexible while resource prices are fixed

Demand to the right

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