Suppose that the economy is currently at full employment. All other things being equal, if central bank implements contractionary policy, then the appropriate fiscal policy is to
A. increase taxes.
B. reduce government spending.
C. balance the budget.
D. increase a budget deficit.
Answer: D
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Globalization and skill-biased technological change have contributed to:
A. increasing wage inequality. B. the long-term growth in real wages. C. the slowdown in productivity since 1973. D. high rates of employment in Western Europe.
The government’s fiscal policy is its plan to influence aggregate demand by changing
A. the money supply. B. minimum wage levels. C. sales taxes. D. taxation and spending.
A person's sensitivity to a price change for a good, such as breakfast cereal, depends on all of the following except the
a. price of the good b. cost of producing the good c. person's income d. availability and closeness of substitutes e. time the person has to adjust to the price change
Mrs. Brown decides to keep $7,000 in her checking account in anticipation of rising interest rates. This is an example of the
A. speculative motive for holding money. B. precautionary motive for holding money. C. commodity demand for money. D. transaction demand for money.