Refer to the diagram, in which Q f is the full-employment output. If the economy's current aggregate demand curve is AD 3 , it would be appropriate for the government to:
A. reduce government expenditures and taxes by equal-size amounts.
B. reduce government expenditures or increase taxes.
C. increase government expenditures or reduce taxes.
D. reduce unemployment compensation benefits.
B. reduce government expenditures or increase taxes.
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In the United States, the smallest source of expenditure on healthcare is
A) government expenditure. B) private insurance expenditure. C) out-of-pocket expenditure. D) unknown.
According to classical economists, government intervention is:
a. necessary to maintain a stable price level in the long run. b. necessary to maintain a stable price level in the short run. c. necessary to maintain full employment in the long run. d. necessary to maintain full employment in the short run. e. not necessary to maintain full employment.
Disinflation occurs when
A. the rate of inflation rises. B. the rate of inflation declines. C. the price level declines. D. the price level stays the same.
Firms need to borrow for operating purposes because they
A. need constant bailouts. B. are always in debt. C. need to pay for goods and services before they will have revenue from their sales. D. need to pay for goods and services after they have sold them.