The government will have _____ flexibility in implementing countercyclical fiscal policy when the outstanding stock of government debt is _____ relative to the size of GDP. a.More; large. b.More; small. c.Less; insignificant. d.Total; large. e.Less; small. Consider an economy initially in a long-run equilibrium. A positive AS shock will _____ the price level and _____ output in the short run. In the long run, the price level will _____ and output _____. a.Increase; increase; return to its initial level; will be restored to potential output. b.Increase; increase; decrease; will be restored to potential output. c.Decrease; increase; return to its initial level; will be restored to potential output. d.Decrease; increase; decrease further; will be restored to potential output. e.Decrease; decrease; decrease further; will decrease further.

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
icon
Related questions
Question
The government will have _____ flexibility in implementing countercyclical fiscal policy when the outstanding stock of government debt is _____ relative to the size of GDP. a.More; large. b.More; small. c.Less; insignificant. d.Total; large. e.Less; small. Consider an economy initially in a long-run equilibrium. A positive AS shock will _____ the price level and _____ output in the short run. In the long run, the price level will _____ and output _____. a.Increase; increase; return to its initial level; will be restored to potential output. b.Increase; increase; decrease; will be restored to potential output. c.Decrease; increase; return to its initial level; will be restored to potential output. d.Decrease; increase; decrease further; will be restored to potential output. e.Decrease; decrease; decrease further; will decrease further.
Expert Solution
steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Politics
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education