Question 23(Multiple Choice ) (03.08 LC) Which of the following is a constraint to discretionary fiscal policy? O Discretionary fiscal policy that is expansionary can only affect frictional unemployment by reducing cyclical unemployment. Discretionary fiscal policy will only affect aggregate supply leaving aggregate demand unchanged. O Discretionary fiscal policy has lags in its effectiveness with time needed to recognize the problem and to carry out policy solutions. O Discretionary fiscal policy can only be used to address unemployment, with no ability to affect the price level. O Discretionary fiscal policy that is expansionary tends to reduce interest rates and overstimulate investment. Question 22 Multiple Choice ) (04.05 MC) Which of the following is true about the money supply curve in an economy? The money supply adjusts automatically to any changes in the economy. The money supply curve is highly responsive to the liquidity preference of individuals. The money supply curve is horizontal. The money supply curve is perfectly inelastic, relative to the interest rate. The money supply curve is relatively inelastic, relative to the interest rate.
