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If the economy starts in long-run equilibrium,
If the economy starts in long-run equilibrium, a permanent fiscal expansion will causeA.an increase in exchange rate,B.a decrease in exchange rate,C.an increase in output,D.a decre...
In the short run, with prices fixed,
In the short run, with prices fixed, how would an increase in government spending affect the DD-AA schedule?A.It will increase output and appreciate theB.It will increase output an...
How is the AA schedule derived?
A.The AA schedule has a positive slope because an increase in output leads to a depreciation of theB.The AA schedule has a negative slope because an increase in output leads to a d...
Imagine that the economy is at a point on the DD-AA
Imagine that the economy is at a point on the DD-AA schedule that is above both AA and DD, where both the output and asset markets are out of equilibrium. Which first action is tru...
In the short run, a temporary increase in the money supply
A.shifts the AA curve to the right, increases output, and depreciates the currency.B.shifts the AA curve to the left, increases output, and depreciates theC.shifts the AA curve to ...
Using the DD – AA framework,
Using the DD – AA framework, which one of the following statements is the most accurate?A.Only monetary policy can bring the economy to fullB.Only fiscal policy can bring the econ...
Explain how an increase in government
Explain how an increase in government spending would affect the DD-AA schedule in the shortAnswer: An increase in government spending will increase aggregate demand, which will shi...
The AA schedule shows
A.interest rate and output pairs at which the foreign exchange market and the domestic money market are inB.exchange rate and output pairs at which the foreign exchange market and ...
Explain how the AA schedule is derived.
Answer: For a fixed real money supply, an increase in output leads to an increase in the domestic interest rate. In the foreign exchange market, an increase in the domestic interes...
Imagine that the economy is at a point on the DD-AA schedule
Imagine that the economy is at a point on the DD-AA schedule that is above both AA and DD and where both the output and asset markets are out of equilibrium. Explain what will happ...
the position of the AA schedule.
Discuss the main factors affecting the position of the AAAnswer: Changes in the domestic money supply; changes in the domestic price level; changes in the expected future exchange ...
Imagine that the economy is at a point on the DD-AA schedule
Use a figure to study the following question: Imagine that the economy is at a point on the DD-AA schedule that is above both AA and DD, where both the output and asset markets are...