Question 46 Under a fixed exchange rate, suppose that the economy initially stays at the long-run equilibrium of ful employment output level. After permanent fiscal expansion, what drives the economy to adjust from it: short-run equilibrium to its new long-run equilibrium? An increase in real money demand. An increase in domestic prices. A decrease in nominal money supply. A decrease in domestic prices. An increase in nominal money supply. Question 47 Under a fixed exchange rate, suppose that the economy initially stays at the long-run equilibrium of full- employment output level. After permanent fiscal expansion, the economy reaches its new long-run equilibrium. Comparing the new and initial long-run equilibria, we find that the current account demand is the same in the two equilibrium. the current account demand is lower in the new equilibrium. the current account demand could be higher or lower in the new equilibrium. the current account demand is higher in the new equilibrium.

Question 46 Under a fixed exchange rate, suppose that the economy initially stays at the long-run equilibrium of ful employment output level. After permanent fiscal expansion, what drives the economy to adjust from it: short-run equilibrium to its new long-run equilibrium? An increase in real money demand. An increase in domestic prices. A decrease in nominal money supply. A decrease in domestic prices. An increase in nominal money supply. Question 47 Under a fixed exchange rate, suppose that the economy initially stays at the long-run equilibrium of full- employment output level. After permanent fiscal expansion, the economy reaches its new long-run equilibrium. Comparing the new and initial long-run equilibria, we find that the current account demand is the same in the two equilibrium. the current account demand is lower in the new equilibrium. the current account demand could be higher or lower in the new equilibrium. the current account demand is higher in the new equilibrium.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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