If the Public Does Not Believe the Government's Claim That

question 139

Multiple Choice

If the public does not believe the government's claim that it will pursue low inflation policies, and the government then goes ahead and adopts an expansionary policy as the public expected, then

• A)the IA line will shift up after the AD curve shifts right.
• B)the IA line will shift down after the AD curve shifts right.
• C)real GDP will increase.
• D)the IA line will shift up before the AD curve shifts right.
• E)the IA line will shift down before the AD curve shifts right.

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Definitions:

Future Investment Opportunity

Potential projects or investments that a company could undertake in the future, which are expected to generate positive returns.

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