A fiscal policy action to close an expansionary gap is to:
A. increase the marginal propensity to consume.
B. increase transfer payments.
C. increase government purchases.
D. increase taxes.
Answer: D
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If products C and D are close substitutes, an increase in the price of C will
A. tend to cause the price of D to decrease. B. shift the demand curve for D to the right. C. shift the demand curves for both products to the right. D. shift the demand curve for C to the left and the demand curve for D to the right.
Which of the following statements is FALSE?
A) Transactions in which households buy final goods and services occur in the factor market. B) Saving is the difference between consumer income and expenditures. C) The value of total output is identical to total income. D) One definition of total income is that it is the annual cost of producing the entire output of final goods and services.
The total quantity of a good that all buyers in the market would buy at various prices at a given time is known as
a. individual demand. b. conglomerate demand. c. market demand. d. additive demand.
If the fiscal authority is focused on maintaining a balance of payments equilibrium, it is said to be pursuing
A) external balance. B) internal balance. C) payments balance. D) international peace.