Does expansionary fiscal policy directly increase the money supply? Isn't it true that the president and Congress fight recessions by spending more money?
What will be an ideal response?
No, expansionary fiscal policy does not directly increase the money supply. The president and the Congress fight recessions by increasing spending, not the money supply, by either increasing government spending or cutting taxes to increase household disposable income and, therefore, consumption spending.
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In a persisting demand-pull inflation
A) aggregate demand increases and potential GDP decreases. B) aggregate demand decreases and aggregate supply decreases. C) aggregate supply decreases and aggregate demand increases. D) aggregate supply increases and aggregate demand increases. E) None of the above answers is correct.
The manager of Slick Lens, a sunglasses manufacturer, notices that the cost to distribute their sunglasses in the spot market has fallen. As a result of the change, which of the following is true?
A) The manager has less of an incentive to integrate backward. B) The manager has more of an incentive to integrate forward. C) The manager has less of an incentive to integrate forward. D) The manager has more of an incentive to integrate backward.
Typical goals of a labor union in the United States include
A. Higher profit, higher output, and greater productivity. B. Higher wages, better working conditions, and more nonwage compensation. C. More benefits, higher pay, and less control over market labor supply. D. More vacation time, higher profit, and more flexible workplace rules.
Which one of the following is not a component of GDP, as measured using the expenditure approach?
A. personal consumption B. exports C. interest D. government spending