In an AD-AS Model with an Upward-Sloping AS-Curve, the Most

question 26

Multiple Choice

In an AD-AS model with an upward-sloping AS-curve, the most likely effects of fiscal expansion would be

• A)an increase in prices and interest rates, but a decrease in real money balances
• B)an increase in output, prices, and real money balances
• C)an increase in consumption and a decrease in investment with no change in output
• D)a decrease in unemployment but an increase in interest rates and real money balances
• E)a decrease in consumption, but an increase in net exports and investment

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Definitions:

Option Contract

A contract granting the option holder the right, but not the obligation, to buy or sell an asset at a predetermined price within a specified time period.

Legal Consideration

Something of value that is promised in exchange for performing an act or refraining from acting, forming a necessary element of a valid contract.

Open Offer

An invitation to all shareholders to purchase additional shares in the company, typically at a discount, and not limited to a specific number of shareholders.

Reasonable Intent

A legal standard assessing what a person of ordinary intelligence and prudence would intend under certain circumstances.