What are the two ways that the government can use fiscal policy to replace spending in a recession?
A. By reducing interest rates or by cutting taxes
B. By spending money on government projects or by increasing the money supply
C. By spending money on government projects or by cutting taxes
D. By spending money on government projects or by reducing interest rates
Ans: C. By spending money on government projects or by cutting taxes
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For the monopoly shown in the figure above, the profit maximizing output is
A) 4 units per day. B) 5 units per day. C) 6 units per day. D) 10 units per day.
In general, liberals favor ______ government and conservatives favor ______ government.
A. more; more B. less; less C. more; less D. less; more
In the real intertemporal model, an adverse sectoral shock acts to
A) reduce real output and reduce the real interest rate. B) increase real output and increase the real interest rate. C) increase real output and reduce the real interest rate. D) reduce real output and increase the real interest rate.
Normally, a firm's borrowing cost is the expected real interest rate, which takes expected inflation into account. With price stickiness, however, the firm will consider only:
a. expected inflation. b. expected wages. c. the nominal rate of interest. d. the expected appreciation of the asset.