Exam 27: Policy Effects and Cost Shocks in the Asad Model

Refer to the information provided in Figure 27.2 below to answer the question(s) that follow. Figure 27.2 -Refer to Figure 27.2. The output multiplier is smallest when the aggregate demand curve shifts from

Refer to the information provided in Figure 27.1 below to answer the question(s) that follow. Figure 27.1 -Refer to Figure 27.1. An aggregate demand shift from AD² to AD⁰ can be caused by

Of the following recessionary periods in the United States, in which was the inflation rate the lowest?

A decrease in the Z factors represents

Refer to the information provided in Figure 27.1 below to answer the question(s) that follow. Figure 27.1 -Refer to Figure 27.1. Suppose the economy is at Point A, a decrease in the price level can cause a movement to Point

When the economy is near capacity, the Fed would lower the interest rate in response to an increase in government spending.

If the economy is on the flat part of the aggregate supply curve, expansionary fiscal policy works well to increase output with little increase in the price level.

Refer to the information provided in Figure 27.2 below to answer the question(s) that follow. Figure 27.2 -Refer to Figure 27.2. Firms respond to an increase in government spending by mostly increasing output when the aggregate demand curve shifts from

Since 1970, the United States has experienced 5 ________ periods and 2 ________ periods.

When the AD curve is relatively flat

Refer to the information provided in Figure 27.2 below to answer the question(s) that follow. Figure 27.2 -Refer to Figure 27.2. An expansionary fiscal policy would be most effective in raising output with little or no inflation when the aggregate demand curve shifts from

In a binding situation, a decrease in government spending

Aggregate demand increases if

Fiscal policy affects the goods market through

If the government increases taxes, the

Since the end of 2008, there has been a zero interest rate bound in the U.S. economy.

An intended goal of expansionary fiscal policy and an easing of monetary policy is

Refer to the information provided in Figure 27.1 below to answer the question(s) that follow. Figure 27.1 -Refer to Figure 27.1. An aggregate demand shift from AD² to AD¹ can be caused by

If wages adjust fully to price increases, fiscal policy will have no effect on output in the long run.

If an increase in the Z factors resulted in a very large change in the price level and a very small change in aggregate output