Suppose That Instead of Using Discretionary Fiscal Policy to Close

question 52

Multiple Choice

Suppose that instead of using discretionary fiscal policy to close an expansionary gap,policy makers left the economy alone.What would probably happen?

• A)depression would result
• B)the economy would be stuck in an expansionary gap
• C)the aggregate demand curve would shift,eliminating the problem
• D)the gap would close after a spurt of inflation
• E)the short-run aggregate supply curve would shift to the right

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Payments made to attorneys or law firms for legal services rendered.

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An insurance policy that protects property buyers and lenders against losses from defects in titles.

Cash-Equivalent Price

The cash-equivalent price is the price of a service or asset if paid for in cash at the same time, as opposed to being financed.

Fair Value

An estimate of the market value of an asset or liability, based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.