________ policy focuses on the nation's money supply, while ________ policy aims at changing the underlying structures or institutions of the economy.
A. Monetary; fiscal
B. Fiscal; structural
C. Monetary; structural
D. Fiscal; monetary
Answer: C
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In the Keynesian-cross model, a decrease in the interest rate ______ planned investment spending and ______ the equilibrium level of income.
Fill in the blank(s) with the appropriate word(s).
Households receive their income in the circular flow diagram by
A. selling the goods they produce at home. B. selling resources they own to business firms. C. obtaining dividends and interest payments. D. selling the use of their property.
If workers and firms have rational expectations, they form their expectations using
A) all the information available to them. B) only information from the past. C) only information provided to them by the government. D) only information gathered from random sources.
In a private closed economy where MPC = 0.8, if consumers reduce their spending by $10 billion and firms cut investments by $5 billion, then equilibrium GDP will decrease by:
A. $75 billion B. $25 billion C. $18.8 billion D. $15 billion