# Figure policy alternatives look at the figure policy

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Chapter 9 / Exercise 70
Mathematical Applications for the Management, Life, and Social Sciences
Harshbarger
Expert Verified
269.(Figure: Policy Alternatives) Look at the figure Policy Alternatives. If the economy is in equilibrium at I1in panel (b), it is in:A)a recessionary gap.B)an inflationary gap.C)simultaneous short-run and long-run equilibrium.D)full employment.270.(Figure: Policy Alternatives) Look at the figure Policy Alternatives. If the economy is in equilibrium at Y1in panel (a) and the government decreases taxes, the result will likely be:A)an increase in unemployment.B)a decrease in interest rates.C)a decrease in aggregate demand.D)an increase in aggregate demand.271.(Figure: Policy Alternatives) Look at the figure Policy Alternatives. If the economy is in equilibrium at Y1in panel (b) and the government does not intervene, the result will likelyPage 55
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Chapter 9 / Exercise 70
Mathematical Applications for the Management, Life, and Social Sciences
Harshbarger
Expert Verified
be a shift of:A)AD1to AD2.B)SRASto the left.C)LRASto the left.D)SRASto the right.272.An inflationary gap caused by a demand shock can be addressed by _____ to _____.A)raising government spending; lower the unemployment rateB)raising taxes; lower the unemployment rateC)lowering government spending; lower the aggregate price levelD)lowering taxes; lower the aggregate price level273.In response to a negative supply shock, the government decreases taxes. The most likely result of the government's tax decrease is a(n) _____ in unemployment and a(n) _____ in the aggregate price level.A)decrease; increaseB)decrease; decreaseC)increase; increaseD)increase; decrease274.Using monetary policy to address a recessionary gap caused by a supply shock involves _____ to _____.A)decreasing the money supply; lower the aggregate price levelB)increasing interest rates; decrease investment spendingC)decreasing interest rates; lower the aggregate price levelD)increasing the money supply; lower the unemployment rate275.Deflation was a problem in both the Great Depression and the recession of 1979–1982.A)TrueB)False276.The aggregate demand curve shows a negative relationship between the price level and the quantity of aggregate output demanded.A)TrueB)False277.The aggregate demand curve shows that at higher price levels the quantity of aggregate output demanded will be less than at lower price levels.A)TrueB)FalsePage 56
278.When the price level increases, people want to hold more money.A)TrueB)False279.When the price level increases and people want to hold more money, interest rates decrease.A)TrueB)False