If the demand for money is insensitive to the interest rate, then the most effective expansionary policy would be
a. fiscal policy.
b. monetary policy.
c. neither fiscal nor monetary policy.
d. both fiscal and monetary policy.
b
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In his second term, President George W. Bush revived his earlier proposal to
A. eliminate entirely the Social Security taxes paid by employers. B. place some Social Security taxes of young workers in private accounts under their control. C. place all Social Security taxes of young workers in private accounts under their control. D. reduce by one-half the Social Security tax rates on employers.
The assumption of diminishing returns in the Heckscher-Ohlin model means that, unlike in the Ricardian model, it is likely that
A) countries will not be fully specialized in one product. B) countries will benefit from free international trade. C) countries will consume outside their production possibility frontier. D) comparative advantage will not determine the direction of trade. E) global production will decrease under trade.
A cut in taxes, combined with an increase in government purchases, would: a. increase AD
b. decrease AD. c. leave AD unchanged. d. have an indeterminate effect on AD.
A comprehensive tax of 15% on all forms of income with no deductions or exclusions is an example of a
A. regressive tax. B. progressive tax. C. rate tax. D. proportional tax.