Question

The government engages in fiscal policy when________?

	A.	The Fed engages in Open Market Operations.
	B.	The IRS collects tax payments every April 15.
	C.	The Environmental Protection Agency cleans up a toxic waste spill.
	D.	Congress extends unemployment benefits during a recession.

Which of the curves in the aggregate demand and aggregate supply model is vertical?

		The long run aggregate supply
		The short run aggregate supply
		The demand
		The money supply

Answer 1

Q1) The government engages in fiscal policy when the congress extends unemployment benefits during recession option (d) as during recession there is a need for increased government spending in order to reduce the adverse effects of the recession(to decrease unemployment).

Q2) The long-run aggregate supply in the aggregate demand and aggregate supply model is vertical. option (a)

The SRAS curve is an upward sloping curve. In the long run, the AS curve has no relation to the price and costs i.e. it is vertical.