The Fed can close a recessionary gap by:
a. increasing fiscal expenditure
b. increasing taxes.
c. decreasing taxes.
d. selling U.S. government bonds.
e. lowering the discount rate.
e
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Which of the following events would cause the interest rates in an economy to increase?
a. Lower tax rates b. A high discount rate c. Lower reserve requirements d. An open market operation to buy bonds
John wants to buy a new lawn mower. He can either buy it in the US and pay $500 or buy it in Mexico and pay 8188 Mexican Pesos. At the exchange rate of 1 Mexican Peso=0.771US$, ignoring any other costs, he would
a. ?Prefer buying in the US b. ?Prefer buying in Mexico c. ?Be indifferent about where he buys his television d. ?None of the above
The traditional Phillips Curve suggests that, if government uses an expansionary fiscal policy to stimulate output and employment:
A. unemployment may actually increase because of the crowding-out effect. B. tax revenues may increase even though tax rates have been reduced. C. deflation may result. D. the natural rate of unemployment may
If beans are inferior goods, a decrease in income will
A. cause beans to sell at a lower price. B. increase the production of beans. C. shift the demand curve for beans to the left. D. shift the demand curve for beans to the right.