Non-discretionary fiscal policy designed to counteract a reduction in aggregate demand might include
A. a return to the gold standard.
B. increased government spending on unemployment benefits.
C. an increase in the money stock.
D. all of the options are correct.
Answer: B
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An increase in the income tax ________ potential GDP by shifting the labor ________ curve ________
A) decreases; demand; leftward B) increases; demand; rightward C) decreases; supply; rightward D) decreases; supply; leftward E) increases; supply; rightward
Most economic forecasts
a. are accurate b. are more reliable than weather forecasts c. rely on mathematical models d. are totally unreliable because economic changes upset outcomes e. are based on ceteris paribus assumptions
If the Fed begins an expansionary policy, which of the following examples would counteract that policy?
a. European banks significantly reduce the number of loans they issue. b. A bank in Milwaukee increases the number of loans it issues. c. An Brazilian insurance company maintains the same loan policy. d. A bank in Jacksonville increases the number of borrowers by 5 percent.
After Hurricane Katrina, the supply curve for gasoline
A. shifted to the left. B. became flatter. C. shifted to the right. D. became steeper.