Which of these would be a fiscal policy the government might want to use if the economy is operating at too high a level of output?
A. Increasing income tax rates
B. Increasing the money supply and lowering interest rates
C. Increasing government purchases of goods and services
Answer: A. Increasing income tax rates
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Suppose one knows two facts: first, the market for prescription drugs experiences chronic shortages and second, the government sets the price for prescription drugs. One can conclude that the government has:
A. encouraged buyers to hoard prescription drugs. B. set the price too high. C. set the price above the equilibrium price. D. set the price below the equilibrium price.
Refer to Figure 19-12. The graph above depicts supply and demand for U.S. dollars during a trading day, where the quantity is millions of dollars. In order to support a fixed exchange rate of 0.30 pounds per dollar, the U.S. central bank must
A) sell 0.4 million dollars per trading day. B) buy 0.8 million dollars per trading day. C) sell 0.8 million dollars per trading day. D) buy 0.4 million dollars per trading day.
In which case can we be sure that real GDP and the price level rise in the short run?
a. foreign economies expand and taxes increase. b. foreign economies expand and taxes decrease. c. foreign economies contract and taxes decrease. d. foreign economies contract and taxes increase.
A monopolistically competitive market is one in which:
A. only one firm sells a product. B. all firms sell an identical product. C. many firms sell similar yet slightly different products. D. firms have no control over the price they charge for their product.