1a.
A \"political business cycle\" suggest that:
Multiple Choice
cyclical swings in the economy are produced by the inherentinstability found in capitalist economies.
there is a trade-off among goals that tends to make the economicpolicies of state and local governments procyclical.
the tools of fiscal policy may be used for political gains andreelection.
the cyclically adjusted budget is a better indicator of thestate of the economy than the actual budget.
1b.
What are the goals of fiscal policy?
Multiple Choice
Increase deflation and increase nominal GDP.
Increase profits and reduce expected returns.
Control inflation and promote full employment.
Increase nominal wages and reduce real interest rates.
1c.
From the information provided, determine whether you are givenan Aggregate Supply or Aggregate Demand Schedule and, if AggregateSupply, the time frame associated with the price level and output.HINT: You may want to plot out the points on a graph.
| Price Level | Output (in billions) |
| 104 | $250 |
| 103 | 250 |
| 102 | 250 |
| 101 | 250 |
| 100 | 250 |
Multiple Choice
Aggregate Demand
Short Run Aggregate Supply
Long Run Aggregate Supply
Immediate Short Run Aggregate Supply
