If there is a constitutional requirement to maintain a balanced budget, then during a recession when tax revenues are shrinking, the government will have to implement:
A. Contractionary fiscal policy
B. No change in fiscal policy
C. Expansionary fiscal policy
D. Countercyclical fiscal policy
A. Contractionary fiscal policy
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To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:
A. not change. B. increase. C. decrease. D. either increase or decrease depending on the relative shifts of AD and AS.
A decrease in the real interest rate outside of the United States will cause net capital outflows to ________ and cause the dollar to ________ relative to other currencies
A) increase; appreciate B) increase; depreciate C) decrease; appreciate D) decrease; depreciate
Savers supply funds to those who want to borrow for their investment spending needs in the:
A. market for loanable funds. B. market for savings. C. market for interest rates. D. stock market.
Which of the following strategies will a government adopt to increase the production of a good?
a. An excise tax on producers b. An excise tax on consumers c. A subsidy to buyers d. A capital gains tax on producers