Question 1 (1 point) Prices that rise continually are always associated with Que
ID: 1223353 • Letter: Q
Question
Question 1 (1 point)
Prices that rise continually are always associated with
Question 1 options:
increases in government spending.
decreases in government spending.
increases in the money supply.
decreases in the money supply.
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Question 2 (1 point)
According to the new Keynesian model, expansionary monetary policy can be effective if it is
Question 2 options:
anticipated.
unanticipated.
both of the above.
neither of the above.
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Question 3 (1 point)
When output is above the natural rate, the labor market is _____ and wages should______
Question 3 options:
tight, rise.
tight, fall.
loose, rise.
loose, fall.
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Question 4 (1 point)
If the monetary policymaker keeps trying to keep output above the natural rate
Question 4 options:
inflation will remain high.
wages will continue to rise.
output will return to the natural rate.
all of the above.
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Question 5 (1 point)
Activist policy is NOT effective according to which model?
Question 5 options:
standard Keynesian
new classical
new Keynesian
It is effective for all of them.
increases in government spending.
decreases in government spending.
increases in the money supply.
decreases in the money supply.
Explanation / Answer
1. When the price increases it leads to increases in government spending. both are interrelated.
2. anticipated. Expansionary fiscal policy involves government attempts to increase aggregate demand. It will involve higher government spending and / or lower tax. In theory, higher government spending will increase aggregate demand and lead to higher economic growth.
3. tight, rise. In this case there will be increse in demand of labor which will lead to rise in wages.
4.wages will continue to rise. Increase in supply will lead to oncrease in labor demand and increase in wages.
5.
standard Keynesian is the answer
standard Keynesian is the answer