The government purchases component of GDP includes:
A. interest payments on government debt.
B. purchases of final goods and services.
C. transfer payments.
D. payments made to social security recipients.
Answer: B
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Which of the following is true of the Golden Age of fiscal policy of the 1960s? a. Fiscal policy was used to prevent output from expanding in 1964
b. Lyndon B. Johnson cut income tax rates to reduce inflationary pressures in the economy c. A tax cut was introduced to increase savings and unemployment. d. A tax cut increased disposable income and consumption. e. The unemployment rate rose by 5 percent for the first time in seven years
Modern paper money is fiat money because it is backed only by the faith the holder has in the government that issued it
a. True b. False Indicate whether the statement is true or false
Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential B. expansionary; higher; potential C. recessionary; lower; potential D. recessionary; lower; lower
Expansionary policies are policies designed to:
A. increase the level of real GDP. B. reduce the level of real GDP. C. decrease government spending. D. reduce the federal deficit.