Question

QUESTION 48

1. In the classical view, "expansionary" fiscal policy financed by a tax increase would
       a.    work as long as the tax increase was a direct increase
       b.    not work because a tax increase would cause inflation
       c.    not work because private expenditures would be reduced by the same amount as the increase in public expenditures
       d.    not work because real interest rates would decline
       e.    not work because of crowding out

2 points   

QUESTION 49

1. Keynesian monetary policy after World War II came to take as its policy objective
       a.    targeting the money supply
       b.    targeting the rate of growth of the money supply
       c.    targeting real interest rates
       d.    targeting nominal interest rates
       e.    targeting monetized debt

2 points   

QUESTION 50

1. As the German hyperinflation accelerated, velocity
       a.    increased
       b.    decreased
       c.    was constant
       d.    was replaced by the MPC

Answer 1

Q-1 Answer :- (B) NOT WORK BECAUSE A TAX INCREASE WOULD CAUSE INFLATION

Explanation :-When Government use Expansionary fiscal Policy and Increase Tax It Leads To increase in Price In Market so Increased Price Cause Inflation So It Is Not Work

Q-2 Answer :- (A) Targeting The Money Supply

*Explanation: After the World War ll Keynesian monetary policy Came to Take As its Policy Objective As to Targeting Money Supply In The Country. by Maintaining Money supply it Provide Stability In The Countries Economy.They Also Control Demand,interest Rate And Inflation By Using It

Q-3 (A) Increase

Explanation :- German hyperinflation Occur During The Period Of 1921-23.There Are Many Cause Responsible for it but During That Time German Hyperinflation Accelerate Increase In Velocity