Refer to Figure 14.2. A movement from point c to point a could be caused by a(n):
A. decrease in government spending.
B. increase in the price of oil.
C. decrease in taxes.
D. decrease in short-run aggregate supply.
Answer: A
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When recessions are the result of slowing growth in potential output, the government's best policy is to:
A. decrease aggregate supply. B. promote saving and investment. C. reduce government spending. D. increase aggregate demand.
James is a resident of the U.S. and has accrued capital gains on an asset. If James sells the asset, ________.
A. its purchase price will include the amount of capital-gains tax payable B. he will realize the gain and owe capital-gains tax C. his capital-gain will be tax free D. the buyer of the asset will owe capital-gains tax
Considering only its direct effect on income, expansionary fiscal policy tends to:
A. increase exports. B. decrease the trade deficit. C. increase imports. D. decrease imports.
In most models of managerial conflict, the owner is the ________ and the manager is the ________.
A. employee; director B. principal; agent C. wage earner; stockholder D. resource; resource owner