The main goal of fiscal policy should always be to
a. generate a budget deficit.
b. balance the budget.
c. balance C + I with government spending.
d. balance aggregate demand with aggregate supply.
d
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The spread between the interest rates on Baa corporate bonds and U.S. government bonds is very large during the Great Depression years 1930-1933. Explain this difference using the bond supply and demand analysis
What will be an ideal response?
The expectations-augmented Phillips curve implies that as expected inflation increases, nominal wages ________ to prevent real wages from ________
A) fall; rising B) fall; falling C) rise; falling D) rise; rising
When one side of a market knows more about a product than the other side, the moral hazard problem is experienced
Indicate whether the statement is true or false
Government can correct for negative externalities by
A) decreasing taxes. B) increasing taxes or regulation. C) allowing the market system to correct the problem. D) decreasing the costs to those responsible for the externality.