Which of the following would be considered an example of fiscal policy?
A. Provision of additional cash to the banking system.
B. A reduction in income tax rates.
C. A broad government initiative to reduce the country's reliance on agriculture and promote high-technology industries.
D. Interest rate hikes generated by a reduction in the money supply.
Answer: B
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Which of the following is included in GDP?
A. Payments received from selling stocks in one's portfolio B. Cash gifts from relatives during the holidays C. The cost of a dinner at a restaurant D. Welfare payments received by some households
Some call the Great Recession the:
A. period when the economy does not grow for four consecutive quarters. B. recession that began in 2007 due to the decline in consumer spending when the housing bubble burst. C. period of high inflation that took place in the early 1970s. D. period of economic stagnation that took place in the early 1990s.
Assume that the expectation of declining housing prices cause households to reduce their demand for new houses and the financing that accompanies it. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the real risk-free interest rate and GDP Price Index in the context of the Three-Sector-Model?
a. The real risk-free interest rate and GDP Price Index remain the same. b. The real risk-free interest rate falls, and GDP Price Index falls. c. The real risk-free interest rate falls, and GDP Price Index stays the same. d. The real risk-free interest rate rises, and GDP Price Index falls. e. The real risk-free interest rate rises, and GDP Price Index rises.
The net export component of aggregate demand is defined as U.S.
A. imports minus U.S. exports. B. imports plus U.S. exports. C. exports minus U.S. imports. D. exports minus taxes and customs duties.