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

Economics

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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.

Economics

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

Economics

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.

Economics

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

Economics