Solved

Use the Following to Answer Questions

Question 280

Multiple Choice

Use the following to answer questions:
Figure: Fiscal Policy II Use the following to answer questions: Figure: Fiscal Policy II -(Figure: Fiscal Policy II) Look at the figure Fiscal Policy II. Suppose that this economy is in equilibrium at E<sub>2</sub>. If there is a decrease in government transfers, _____ will shift to the _____, causing a(n) _____ in the price level and a(n) _____ in real GDP. A) AD<sub>2;</sub> left; increase; decrease B) AD<sub>2;</sub> left; decrease; decrease C) AD<sub>1;</sub> right; increase; increase D) AD<sub>1;</sub> left; decrease; decrease
-(Figure: Fiscal Policy II) Look at the figure Fiscal Policy II. Suppose that this economy is in equilibrium at E2. If there is a decrease in government transfers, _____ will shift to the _____, causing a(n) _____ in the price level and a(n) _____ in real GDP.


A) AD2; left; increase; decrease
B) AD2; left; decrease; decrease
C) AD1; right; increase; increase
D) AD1; left; decrease; decrease

Correct Answer:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Q20: Contractionary fiscal policy includes:<br>A) increasing government purchases.<br>B)

Q101: A change in taxes or a change

Q117: Expansionary fiscal policy includes:<br>A) decreasing taxes.<br>B) increasing

Q275: An automatic stabilizer that works when the

Q278: Assume that the marginal propensity to consume

Q279: The cyclically balanced budget deficit doesn't fluctuate

Q281: The stability pact signed by many of

Q282: Assume the marginal propensity to consume is

Q283: Suppose the marginal propensity to consume is

Q285: During a recessionary gap:<br>A)holding everything else constant,