Use the following graph to answer the next question.
In the diagram, Qf is the full-employment output. If the economy's present aggregate demand curve is AD2,
A. the most appropriate fiscal policy is a reduction in government purchases or an increase of taxes.
B. the most appropriate fiscal policy is an increase in government purchases or a reduction of taxes.
C. the government should undertake neither an expansionary nor a contractionary fiscal policy.
D. the economy is achieving its maximum possible output.
Answer: C
You might also like to view...
For which of the following will the law of one price hold best?
A) shirt B) butter C) gold D) milk
Which of the following correctly describes the Lorenz curve?
a. The Lorenz curve shows that the increasing income inequality in the U.S. society is actually good for the economy. b. The Lorenz curve shows the growth rate in real median family income over time. c. The Lorenz curve shows the cumulative distribution of family income, ranked from the poorest to the richest families, and compares that curve with the straight line indicating perfectly equal income distribution. d. The Lorenz curve shows the cumulative distribution of family income, ranked from the richest to the poorest families, and compares that curve with the ideal of having all income go to the richest 5 percent of society.
If A and B are two disjoint sets, and "Pr" represents the probability, then Pr[A or B] will be:
a. unity. b. zero. c. Pr[A]+Pr[B]. d. Pr[A]-Pr[B].
Briefly explain the benefits of a flat tax.
What will be an ideal response?