What is wrong (if anything) with each of the followingstatements?a. “In the 'Intermediate Run' an increase in the realinterest rate leads to a reduction in Investment andan increase in Consumption."5. "Because of the Classical Dichotomy, the monetaryconditions in the nominal side of the economy have adirect impact on conditions in the real side of theeconomy."c. "In the 'Intermediate Run', the aggregate supplycurve is upward sloping."d. "In the 'Intermediate Run' model, an increase (arightward shift) in the 'IS' curve will lead to anincrease in output and an increase in the real interestrat"e. "In the 'Intermediate Run' model, an increase in thetechnology parameter (A†) will lead to increasedemployment, an expansion of output, and anincrease in the real interest rate."f. "In the 'Intermediate Run' model, an increase ingovernment expenditures will lead to a permanentexpansion in output."g. "Ricardian Equivalence suggests that households caninfer an increase in federal government spendingthat is financed by borrowing will not lead to a futureincrease in their tax liabilities."

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Answered: "In the 'Intermediate Run' an increase…

"In the 'Intermediate Run' an increase in the real interest rate leads to a reduction in Investment and an increase in Consumption."

Principles of Economics (MindTap Course List)

8th Edition

ISBN:9781305585126

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter34: The Influence Of Monetary And Fiscal Policy On Aggregate Demand

Section: Chapter Questions

Problem 4CQQ

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