The existence of an inflationary gap or an recessionary gap depends on the
A. aggregate supply only.
B. expenditure schedule.
C. leakages schedule.
D. injections schedule.
E. aggregate demand and aggregate supply schedules.
Answer: E
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When the Fed makes higher interest payments on bank reserves, banks will hold ________ reserves which will ________ the money supply
A) less; increase B) less; decrease C) more; increase D) more; decrease
In 2010, the U.S. government had tax revenues of $2,703 billion and outlays were $3,973 billion. The budget
A) deficit was $1,270 billion. B) deficit was $3,973 billion. C) surplus was $2,703 billion. D) was balanced because every dollar the government spends it must raise. E) surplus was $1,270 billion. The table above gives a nation's government outlays and tax revenues for 2008 through 2012.
Which of the following assumptions is TRUE about monopolistic competition?
A) The firm's products are differentiated. B) There are few producers of the product. C) Firms will not advertise. D) It is difficult for firms to enter this industry.
Why might tax cuts be more appropriate than increasing government expenditures to counter recessions? Is there any evidence for this thinking?