The three ways government can alter aggregate demand are:
A. Agriculture subsidies, science & technology subsidies, and education grants.
B. Provide or deny food, clothing, and shelter.
C. Nationalization of private businesses, institution of price controls, and Pigouvian taxes on externalities.
D. Tax the Internet, close the bars, and ban football.
E. Government spending, tax policy, and transfer of income
Answer: E. Government spending, tax policy, and transfer of income
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The table above gives some of the entries in the national income and product accounts. The government sector has a ________, and the private sector has a ________
A) surplus of $50 billion; surplus of $25 billion B) deficit of $50 billion; surplus of $25 billion C) surplus of $50 billion; deficit of $25 billion D) deficit of $50 billion; deficit of $25 billion
A change in the required reserve ratio changes: a. the amount of actual reserves in the banking system
b. the amount of excess reserves in the banking system. c. the value of government securities held by the Fed. d. the level of insurance for banks who are members of the FDIC.
The Keynesian idea that the government can achieve a specific level of GDP by changing government spending and taxing was known as
a. fine-tuning b. supply-side stimulation c. classical manipulation d. hunting for the Phillips curve e. crowding out
The intended purpose of price floors is to ______.
a. help large farming corporations contribute more revenue to the local tax base b. allow domestic farmers to trade competitively against foreign markets c. create enough revenue for small-volume farmers to maintain a “decent” standard of living d. encourage farmers to grow only those products which will maximize surplus for consumers