Which of the following statements concerning stabilization policy is correct?
A) Increasing government spending during an economic boom would be an example of a stabilization policy.
B) Increasing taxes during a recession would be an example of a stabilization policy.
C) New Keynesian economists are skeptical of the value of stabilization policies.
D) Increasing the money supply during a recession is an example of a stabilization policy.
D
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Suppose iPhones cost 180 euros and 240 dollars in Belgium and the United States, respectively, while binoculars cost 60 euros and 75 dollars in Belgium and the United States, respectively
If the exchange rate is 0.75 euros/dollar, the law of one price ________ for iPhones and ________ for binoculars. A) holds; holds B) does not hold; holds C) does not hold; does not hold D) holds; does not hold
The price elasticity of demand for a good tends
A) not to vary over time because people adjust to changed circumstances. B) to be greater over the long run than over a short period of time. C) to be less over the long run than over a short period of time. D) to rise when the demand increases. E) toward unity in the long run.
Rising inflationary pressure caused the U.S. to tighten its monetary policy at the end of the 1960s
As a result, market interest rates rose above the Regulation Q ceiling and American banks found it impossible to attract time deposits for re-lending. How did the banks get around this problem? A) by setting their own interest rates and then using better business as compensation for government regulations B) by borrowing funds from European branches, which faced no restriction on the interest they could pay on Eurodollar deposits C) by pushing through new legislation that nullified Regulation Q D) by creating subsidiary branches in foreign countries E) by waiting to trade time deposits until Regulation Q no longer applied
Regulatory forbearance
A) meant delaying the closing of "zombie S&Ls" as their losses mounted during the 1980s. B) had the advantage of benefiting healthy S&Ls at the expense of "zombie S&Ls," as insolvent institutions lost deposits to health institutions. C) had the advantage of permitting many insolvent S&Ls the opportunity to return to profitability, saving the FSLIC billions of dollars. D) increased adverse selection dramatically.