Demand shocks and zero coupon bonds

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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

Reference no: EM131935510

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