Exam 13: Policy Effects and Costs Shocks in the Asad Model

During the recession of 1980-1982,the Fed raised the interest rate to fight inflation.

In a binding situation,

When the economy is on the flat part of the AS curve,there is very little crowding out of planned investment.

The Fed acted aggressively in lowering the interest rate during the recession(s)of

Demand-pull inflation can be the result of

Refer to the information provided in Figure 13.4 below to answer the questions that follow. Figure 13.4 -Refer to Figure 13.4.Stagflation would NOT be caused by a

Demand-pull inflation is initiated by an increase in aggregate demand.

If the AD curve is relatively flat,the Fed is willing to accept large changes in output to keep the price level stable.

When analyzing the effects of government spending,net taxes,and the Z factors,what primarily matters is the shape of

In a binding situation,the ________ curve is ________.

When the AD curve is vertical,

An increase in government spending will completely crowd out investment if

A rightward shift in the aggregate demand curve generates a ________ inflation and ________ output.

An earthquake destroyed 50% of the Moldovian manufacturing base.The Moldovian government decided to use a contractionary fiscal policy to counter the effects of the earthquake on the economy.The use of the contractionary fiscal policy would have caused

An increase in AD will primarily increase output when the economy is on the flat part of the AS curve.

If the economy is on the steep portion of the AS curve and taxes decrease,________ crowds out ________.

There is evidence that the Fed,under chairman Ben Bernanke,has engaged in inflation targeting.

In a binding situation,the AD curve is vertical.

Refer to the information provided in Figure 13.1 below to answer the questions that follow. Figure 13.1 -Refer to Figure 13.1.Suppose the economy is at Point A,an decrease in government purchases can cause a movement to Point

If the aggregate supply curve is vertical in the long-run,then neither monetary nor fiscal policy will affect aggregate output in the long-run.