Which of the following is a contractionary fiscal policy that decreases the level of aggregate demand?
a. reduced business taxes
b. reduced government spending
c. reduced payroll taxes
d. reduced personal income taxes
b. reduced government spending
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A firm in a price-taker market:
a. must take the price that is determined in the market. b. must reduce its price if it wants to sell a larger quantity. c. must be large relative to the total market. d. can exert a major influence on the market price.
Based on the figure below. Starting from long-run equilibrium at point C, a decrease in government spending that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at__ creating _____gap.
A. B; no output B. D; an expansionary C. B; recessionary D. D; a recessionary
The profit-maximizing monopolist will operate in a price range over which
A) demand is elastic. B) demand is inelastic. C) the price elasticity of demand is less than 1. D) supply is elastic.
Productivity, or output per labor hour, rises as transportation costs fall
Indicate whether the statement is true or false