1. Demand Shocks Which one of the following is a positive demand shock for the U.S. economy?
The government declares a payroll tax holiday for 3 months.
The dollar increases in value sharply resulting in a decline in net exports.
Unemployment increases sharply.
The government institutes a value added tax on all goods and services produced in the U.S.
2. Zero Coupon Bonds Stimulative monetary policy would be an appropriate response to
I. a positive demand shock
II. a negative demand shock
III. a negative supply shock
III only
I only
I and II only
II only