If policy makers were worried about the inflationary potential of an economy, which of the following would be an appropriate fiscal policy measure?
a. ?A decrease in government purchases
b. ?A decrease in consumption taxes
c. ?Open market operations
d. ?Deficit spending
e. ?An increase in transfer payments
Answer: a. ?A decrease in government purchases
You might also like to view...
A goal of the Securities and Exchange Commission is to reduce problems arising from
A) competition. B) banking panics. C) risk. D) asymmetric information.
Which of the following terms is not associated with a market having a firm whose behavior has been judged to be characteristic of the dominant firm model?
a. godfather b. price leadership c. kinked demand curve d. profit maximization e. oligopoly
Suppose the Fed's primary goal is price stability and it aims to keep the inflation rate at 2%. If the inflation rate rose above 2%, what should it do?
A) pursue an expansionary monetary policy B) pursue a contractionary monetary policy C) reduce the required reserve ratio D) impose a temporary ceiling on the federal funds rate
The demand curve for a monopoly is:
a. horizontal because of economics of scale. b. infinitely elastic. c. above the marginal revenue curve. d. below the marginal revenue curve.