In the short-run, the effect on real GDP of a government budget deficit produced by a tax cut will be neutralized if
A) the Federal Reserve loosens monetary policy, which shifts the LM curve to the right and lowers real interest rates.
B) the Federal Reserve tightens monetary policy, which shifts the IS curve to the left and raises real interest rates.
C) the Federal Reserve tightens monetary policy, which shifts the LM curve to the left and raises real interest rates.
D) the Federal Reserve loosens monetary policy, which shifts the IS curve to the right and raises real interest rates.
Correct Answer:
Verified
Q52: The only three time periods in which
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Q54: Each of the following was a factor
Q55: Each of the following is a potential
Q56: In the short-run, a government budget deficit
Q58: In the short-run, a government budget surplus
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Q60: An increase in the government's budget deficit
A)
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A)
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A) reduce total savings, raise
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