Suppose the economy experiences a recessionary gap. Policymakers who believe that the private sector has failed to provide adequately, a host of services that would benefit society would favor which of the following policies to close the gap?
A) subsidies to private firms to spur production
B) decreases in income tax rates
C) increases in government purchases
D) decreases in interest rates
Ans: C) increases in government purchases
You might also like to view...
In what sense is tariff escalation protectionist? What alternatives exist for remedying this problem?
What will be an ideal response?
Long-term contracts are desirable for both firms and workers for each of the following reasons EXCEPT one. Which of the following does NOT explain the desirability of long-term contracts?
A) Wage negotiations are costly and time consuming on both sides. B) Contracts insulate workers from changing economic conditions such as decreases in aggregate demand. C) The incidence of strikes decreases because the contracts are binding for three years. D) Contracts reduce uncertainty.
In 2001, a U.S. court of appeals tossed out an earlier U.S. district court order that Microsoft:
A. license Windows for sale by competitors. B. be split into two competing firms. C. divest itself of its Word and PowerPoint software programs. D. end its proposed acquisition of Sun Microsystems.
If the consumption schedule shifts downward, and the shift was not caused by a tax change, then the saving schedule:
A. May shift either upward or downward B. Will shift downward C. Will shift upward D. Will not shift