In general, fiscal policy is used to:
A. make business cycle booms bigger and busts smaller.
B. even out the booms and the busts in the business cycle.
C. to reverse the pattern of booms and busts in the business cycle.
D. make business cycle booms and busts both bigger.
Answer: B. even out the booms and the busts in the business cycle.
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The short-run Phillips curve shows a relationship between the
A) unemployment rate and the interest rate. B) inflation rate and the interest rate. C) price level and real GDP. D) inflation rate and real GDP. E) inflation rate and the unemployment rate.
The figure above shows Tanya's consumption possibilities. Tanya spends $100 per month on movies and restaurant meals. The price of a movie ticket is ________ and the price of a restaurant meal is ________
A) $7; $15 B) $10; $10 C) $20; $5 D) $5; $20
The efficient markets hypothesis implies that prices in the stock market
A) follow a definite pattern. B) are more likely to go up than down. C) always undervalue the true assets of a corporation. D) are unpredictable.
The neoclassical view is not especially helpful in explaining why __________ moves up and down over short time horizons of a few years.
a. demand b. unemployment c. prices d. inflation