If the Congress passes legislation to decrease government spending to control demand-pull inflation, then this would be an example of a(n):
a. Nondiscretionary fiscal policy
b. Automatic stabilizers
c. Contractionary fiscal policy
d. Expansionary fiscal policy
c. Contractionary fiscal policy
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A hike in the federal funds rate results in ________ in the real interest rate which leads to a ________ in investment
A) an increase; a decrease B) a decrease; a decrease C) a decrease; an increase D) a decrease; no change E) an increase; an increase
A drawback in the use of sensitivity analysis in capital budgeting decisions is that it doesn't
A) permit evaluating alternative outcomes. B) provide estimates of net present values. C) assign probability values to outcomes. D) consider different possible rates of discount.
A central bank disinflates. Output falls by 3% for one year, 2% the second year, and 1% the third year. If inflation fell by 2 percentage points, what was the sacrifice ratio?
A monopolistic competitor would face a demand curve with a
A. slope equal to 0. B. positive slope. C. negative slope. D. constant slope.