According to the Keynesian view, if policy makers thought the economy was about to fall into a recession, which of the following would be most appropriate?
a. a reduction in government expenditures and/or an increase in taxes
b. an increase in government expenditures and/or a reduction in taxes
c. make no policy changes because market forces will assure the maintenance of full employment.
d. maintain a balanced budget
B
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Which of the following would cause a fall in the price of video tape rentals?
a. A new nationwide video rental chain opens. b. Movie theaters raise their prices. c. The royalties paid to movie actors increase. d. The price of video cassette recorders (VCRs) falls.
"Demand" refers to the relationship between the price of a good and the quantity consumers are willing and able to buy at each price
Indicate whether the statement is true or false
If the federal government runs a budget deficit, and the budget deficit as a percent of GDP is equal to the growth rate of real output, the
a. national debt will decrease as a share of GDP. b. national debt will remain a constant share of GDP. c. national debt will increase as a share of GDP. d. size of the national debt (in dollar value) will decline.
Suppose a government that taxed all interest income changed its tax law so that the first $5,000 of a taxpayer's interest income was tax free. This would shift the
a. supply of loanable funds to the right, causing interest rates to fall. b. supply of loanable funds to the left, causing interest rates to rise. c. demand for loanable funds to the right, causing interest rates to rise. d. demand for loanable funds to the left, causing interest rates to fall.