Governments are said to fine-tune the economy when they attempt to use fiscal policy to:
A. keep the economy always at its target or potential level of income.
B. offset only large fluctuations in aggregate demand.
C. offset fluctuations in aggregate supply.
D. eliminate unemployment.
Answer: A
You might also like to view...
Specialization according to comparative advantage, followed by trade, allows everyone to acquire more of the goods they want
a. True b. False Indicate whether the statement is true or false
The per-worker production function is ____ sloped and ____ at a(n) ____ rate
a. negatively; decreases; diminishing b. negatively; decreases; increasing c. positively; increases; increasing d. positively; increases; diminishing
Amos is a baker in Tucson. Which of the following statements is correct?
a. The wage needed to keep Amos in the bakery industry in Tucson in the long run is lower than the wage needed to keep him in the industry in the short run. b. The costs of entering the bakery industry in Tucson are sunk costs and therefore those costs shouldn't be a consideration in Amos's decision to stay in the industry. c. The wage needed to keep Amos in the bakery industry in Tucson in the short run is lower than the wage needed to keep him in the industry in the long run. d. The wage needed to keep Amos in the bakery industry in Tucson in the long run is not important -- only the short-run wages are relevant. e. The costs of entering the bakery industry in Tucson are sunk costs and therefore those costs should be considered in Amos's decision to stay in the industry.
Suppose the Fed injects $50 billion of new money by buying U.S. treasury bonds from the public. If the required reserve ratio is 10 percent, banks convert all excess reserves into loans, and the public hold all their money in their checking accounts rather than in cash, then by how much will the money supply ultimately increase due to this injection?
a. $5 billion b. $50 billion c. $500 billion d. $950 billion