How might fiscal policy be used to correct an inflationary gap?
A) The exchange rate would be adjusted to encourage imports.
B) The exchange rate would be adjusted to discourage imports.
C) The interest rate would be adjusted to encourage saving.
D) Taxes would be increased to reduce aggregate demand.
D
You might also like to view...
The law of increasing costs states that
A. opportunity costs decrease as more of one good is produced. B. increasing resource prices are inevitable because of scarcity. C. opportunity costs increase as more of one good is produced. D. resources can be easily adapted to the production of any good
The above figure shows Larry's indifference map and budget lines for ham and pork. Which of the following statements is TRUE?
A) Pork is an inferior good. B) Ham is an inferior good. C) Neither pork nor ham is an inferior good. D) Both ham and pork are inferior goods.
Utilitarianism is a type of
a. consequentialism b. relativism c. deontological ethics d. egoism
In the classical model, what happens to the level of real GDP if aggregate demand increases?
A) Real GDP increases. B) Real GDP decreases. C) Real GDP would increase at first, then decrease. D) Real GDP would remain the same, at equilibrium.