Which of the following actions is an example of an expansionary fiscal policy?
A) an increase in the discount rate
B) a decrease in defense spending
C) a sale of government securities in the open market
D) a decrease in net taxes.
Answer: D) a decrease in net taxes.
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Even a monetary policy based on a rigid high-powered money growth rate rule can lack policy credibility, due in part to ________, while a policy that targets the inflation rate itself ________
A) lags, must have policy credibility by definition B) lags, can lack credibility due to both lags and multiplier certainty C) multiplier uncertainty, must have policy credibility by definition D) multiplier uncertainty, can lack credibility due to both lags and multiplier uncertainty
The fact that output gaps will not last indefinitely, but will be closed by rising or falling inflation is the economy's:
A. income-expenditure multiplier. B. self-correcting property. C. short-run equilibrium property. D. long-run equilibrium property.
The difference between iron ore deposits and the steel produced from these deposits that is later used to make factory equipment illustrates the difference between:
A) labor and a natural resource. B) labor and capital. C) a natural resource and capital. D) a natural resource and entrepreneurship.
If the absolute price elasticity of demand for automobiles is equal to 1.25, we say
A) that demand is elastic. B) that demand is inelastic. C) that there is a strong responsiveness of quantity demanded to automobiles price cuts. D) none of the above is correct.