apee demand incrs white ely remains the same A) Surpluses willcause coot-pushs i
ID: 1142338 • Letter: A
Question
apee demand incrs white ely remains the same A) Surpluses willcause coot-pushs inflation B) surpluses will cause demand-pull inflation inflation D) shontages will cacuse coot-push inflation ) shortages will cause 0) Suppose government revenses are greater than its expenditures, it is experiencing a A) Deficit B) Surplus C) Balance D) Recession E) Recovery 31. Which of the following groups believe that the economy can achieve full employment without inflation through tax reductions, spending cuts and deregulation? A) Classical school. B) Keynesian school C) Neo-Keynesian school D) Rational expectations school. E) Supply-side school. 32) Which of the following is a component of aggregate demand? B) Government C) Foreign sector D) Households E) All of the above 33) what type of tax did the Reagan Administration use from the 1980's to about 1990? A) Regressive C) Proportional D) Progressively proportional E) Supply-sideExplanation / Answer
29) E
Aggregate demand (AD) curve shows the relationship between price level and real GDP. If AD exceeds AS then price levels will increase leading to demand pull inflation. When price levels increase, firms will increase their productive capacity and hire more workers. This would lead to higher wages and increased disposable income. Higher disposable income would lead to more consumer spending leading to demand pull inflation.
30) A
If government expenditure exceeds government revenue then a deficit results.
31) E
Supply side school. Supply school advocates believed that economic growth can be achieved by lowering taxes and deregulation.
32) E
The components of AD are consumption, investment, government spending and net exports.
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