Which of the following is an appropriate discretionary fiscal policy if equilibrium real GDP falls below potential real GDP?
A) an increase in government purchases
B) an increase in the supply of money
C) an increase in individual income taxes
D) a decrease in transfer payments
Answer: A
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The demand and supply schedules for pizza are in the table above. If the government sets a maximum legal price of $2 per slice of pizza, then
A) there is a shortage of 20 slices of pizza. B) this maximum price is an example of a price floor. C) this maximum price is an example of a price ceiling. D) Both answers A and C are correct. E) Both answers B and C are correct.
The above figure shows the demand and supply curves in the market for milk. Currently the market is in equilibrium. If the government imposes a $2 per gallon tax to be collected from sellers, estimate the change in p, Q, and social welfare
What will be an ideal response?
In order to determine tax incidence, one must
a. consider issues of equity. b. also determine the legal liability of the tax. c. evaluate where the tax burden eventually falls. d. use the "flypaper theory" of taxation.
If the discount rate is lowered, banks borrow
a. less from the Fed so reserves increase. b. less from the Fed so reserves decrease. c. more from the Fed so reserves increase. d. more from the Fed so reserves decrease.