Match Concepts to Definitions between the Numbers and Alphabetical : 1) 0Fiscal
ID: 1198983 • Letter: M
Question
Match Concepts to Definitions between the Numbers and Alphabetical :
1) 0Fiscal Policy
2) Balanced trade
3) Aggregate Expenditure Model.
4) Aggregate Demand-Supply Model
5) Liquidity Preference
6) Liquidity Trap
7) MPC
8) Natural rate hypothesis
9) Long run Phillips Curve
10) Rational Expectations
A) Positive level of net exports
B) Net exports are equal to zero.
C) Economy fluctuates around potential output, cannot be persistently below potential
D) Relationship between real Consumption plus Investment plus Government plus Net Exports and price level.
E) The purchase of foreign assets by domestic residents minus the purchase of domestic assets by foreigners.
F) When interest rates are close to zero.
G) Government spending and taxation policy.
H) Interest rate adjusts to bring money supply and money demand into equilibrium.
I) Relationship between total desired or planned expenditures on goods and services in the economy and real income assuming no change in the price level.
J) Only unanticipated changes in monetary policy had real effects. As soon as people understood that Fed targeted a lower rate of inflation, prices and wages would adjust, without the need for sustained high unemployment.
K) Fraction of extra income that households consume rather than save
L) Any attempt to keep the unemployment rate below the natural rate will cause inflation to spiral upward.
Explanation / Answer
S.no. Topic Definition 1 Fiscal Policy Government spending and taxation policy 2 Balanced trade Net exports are equal to zero. 3 Aggregate Expenditure Model Relationship between total desired or planned expenditures on goods and services in the economy and real income assuming no change in the price level. 4 Aggregate Demand-Supply Model Relationship between real Consumption plus Investment plus Government plus Net Exports and price level 5 Liquidity Preference Interest rate adjusts to bring money supply and money demand into equilibrium 6 Liquidity Trap When interest rates are close to zero 7 MPC Fraction of extra income that households consume rather than save 8 Natural rate hypothesis Economy fluctuates around potential output, cannot be persistently below potential 9 Long run Phillips Curve Any attempt to keep the unemployment rate below the natural rate will cause inflation to spiral upward. 10 Rational Expectations Only unanticipated changes in monetary policy had real effects. As soon as people understood that Fed targeted a lower rate of inflation, prices and wages would adjust, without the need for sustained high unemployment.