1. Stagflation means.----.A.inflation------------B.recession-----------C.inflati

Question

1. Stagflation means.----.A.inflation------------B.recession-----------C.inflation and recession----------D.inflation and growth 2. The simple Keynesian model assumes that------A.prices, especially the price of wages, are "sticky downward." -------B.there will never be any excess capacity in the short run.--------C.aggregate demand will always equal aggregate supply.--------D.gross private domestic investment exceeds net investment by the capital consumption allowance. 3. The least stable sector of GDP is A......G.--------B...... I.-------C...... C.-------D.......Net exports. 4. As the maximum output level is approached, the aggregate supply curve is-----A.horizontal--------B.downward sloping-----------C.upward sloping-------D.vertical 5. If an economy is experiencing recession, fiscal policy should include ........A. more government spending----------B.--------eliminating unemployment benefits----------C.increase in taxes----------D.less government spending 6. Major tool in implementing fiscal policy is to change the money supply.......True------False 7. An expansionary gap is equal to actual short-run output minus potential output......True ------False--------8The multiplier effect occurs because --------A.as saving levels increase, a greater pool of loanable funds is available for investment spending by businesses-----------B. increases in income cause a chain reaction of spending by many businesses and individuals-----------C. increases in income cause tax revenues to increase, thereby stimulating increases in government spending levels--------------D. businesses copy the spending decisions of their competitors

Explanation / Answer

Stagflation is when economic growth stagnates while inflation is rising -D.inflation and growth

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