The government's running of a deficit or a surplus with the objective of affecting the level of output in the economy is called:
A. sound finance.
B. the Ricardian equivalence.
C. fiscal policy.
D. public finance.
Answer: C
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When people smoke cigarettes, their friends and family members may become sick. This affects GDP by
A. reducing GDP by the amount of medical care needed. B. reducing GDP by the cost of the cigarettes purchased. C. increasing GDP by the cost of the medical care and the cost of the cigarettes purchased. D. decreasing GDP by the cost of the medical care and increasing GDP by the cost of the cigarettes purchased.
Fixed exchange rates require governments to have
a. control over the cuntry's exports b. anti-arbitrage investigators c. large quantities of gold d. trade surpluses e. foreign exchange reserves
Public choice theory suggests politicians will be most likely to favor redistribution of income from
a. the rich to the poor. b. unorganized taxpayers to well-organized interest groups. c. middle-income taxpayers to both the rich and the poor. d. well-organized businesses and labor groups to consumers.
Which of the following is not a source of inequality in incomes?
A. Redistribution of income B. Differences in intensity of work C. Differences in ability D. Risk taking