Deficit financing
A) is when the government adjusts taxes to raise money to pay for government projects.
B) is the mechanism behind the Laffer curve.
C) is how the automatic stabilizers work.
D) is when discretionary fiscal policy leads to spending more than is collected in taxes.
D)
You might also like to view...
The appropriate fiscal policy stance depends, at least partly, on the
A. stance of trade policy. B. stance of monetary policy. C. party in power in Congress. D. party in power in the presidency.
Suppose the economy is initially in short-run equilibrium and the Fed decreases the nominal money supply. If the price level remains constant, real GDP will ________ relative to potential GDP and the real interest rate will ________
A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease
If a customs union includes the lowest-cost world producer of a product, then member countries:
a. will always be better off in trade with that product. b. will always be worse off in trade with that product. c. can be better off or worse off depending on the strengths of the trade diversion and trade creation effects for that product. d. will no longer export or import that product.
A natural monopoly
A. usually arises when there are large economies of scale. B. involves multiple firms selling differentiated products. C. is derived from deposits of natural resources. D. requires government licensing initially.