In the DSGE Framework, Prospects for a "Fiscal Cliff" in the Fall

question 30

Multiple Choice

In the DSGE framework, prospects for a "fiscal cliff" in the fall of 2012 increases ________ about the future leading firms to ________, which would ________.

• A) uncertainty; delay investment; slow economic activity
• B) federal surpluses; hire more workers; decrease unemployment
• C) state spending; reduce pensions; reduce the labor supply
• D) tax rates; increase investment; improve TFP
• E) interest rates; reduce investment; lead to better long-term growth

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Definitions:

Buick Owner's Demand

The specific demand characteristics and preferences of individuals who own or are interested in purchasing Buick vehicles.

Gasoline

A volatile, flammable liquid derived from petroleum, primarily used as fuel in internal combustion engines.

Gas Pump

A machine at a gas station that dispenses liquid fuel such as gasoline or diesel into the tank of a vehicle.

South Dakota

A U.S. state located in the Midwestern region, known for its rolling prairies, Badlands National Park, and the Mount Rushmore National Memorial.