Consider a Simple Macro Model with a Constant Price Level

question 83

Multiple Choice

Consider a simple macro model with a constant price level and demand-determined output.The inclusion of government in such a model affects desired aggregate expenditure directly through ________ and indirectly through ________.

• A)the net taxes; the government purchases of goods and services
• B)the net taxes; its affect on disposable income
• C)the government purchases of goods and services; its effect on net exports
• D)the government purchases of goods and services; its effect on disposable income
• E)the government purchases of goods and services; its effect on investment

Understand the impact of fiscal policy on aggregate demand and the natural rate of unemployment.

Recognize the time lags associated with the approval and implementation of fiscal policy.

Identify and explain the concepts of stagflation and political business cycles.

Comprehend the role and effects of fiscal policy during historical periods, including the Golden Age of the 1960s and the Reaganomics.

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