To combat a recession, Keynesian fiscal policy recommends:
a. an increase in taxes.
b. an increase in government spending.
c. an increase in taxes and a decrease in government purchases to balance the budget.
d. a reduction in both taxes and government spending.
b
You might also like to view...
Frictional unemployment increases when
A) real GDP decreases and the unemployment rate rises. B) the number of workers who quit one job to find another increases. C) discouraged workers drop out of the work force. D) workers are replaced by machines and the unemployed workers do not have the skills to perform new jobs.
Natural monopolies in the United States are generally regulated by
A) the Department of Commerce. B) the Federal Trade Commission. C) local or state regulatory commissions. D) the Department of Justice.
All else equal, an increase in the government's budget deficit accompanied by a decrease in corporate taxes would definitely result in
A) an increase in the equilibrium real interest rate. B) a decrease in the equilibrium real interest rate. C) an increase in the equilibrium level of saving and investment. D) a decrease in the equilibrium level of saving and investment.
All of the following illustrate how government can correct for positive externalities EXCEPT
A) subsidies. B) regulation. C) government financing and production. D) charging effluent fees.