An active stabilization policy designed to limit the size of government would
A. raise G to eliminate a recessionary gap and lower taxes to eliminate an inflationary gap.
B. raise G to eliminate a recessionary gap and raise taxes to eliminate an inflationary gap.
C. reduce taxes to eliminate a recessionary gap and raise G to eliminate an inflationary gap.
D. reduce taxes to eliminate a recessionary gap and reduce G to eliminate an inflationary gap.
Answer: D
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The substitution effect of a wage increase is observed when
A) leisure's higher opportunity cost causes workers to take more leisure and work less. B) leisure's higher opportunity cost causes workers to take less leisure and work more. C) the higher wage income causes workers to take more leisure and work more. D) the higher wage income causes workers to take more leisure and work less.
Which of the following would likely be involved in a new bond offering?
A) a commercial bank B) an investment bank C) a broker D) a dealer
A quota:
A. is a tax on imports. B. is a tax on exports. C. directly limits the total quantity of a good that can be imported. D. directly limits the total quantity of a good that can be exported.
Voluntary exchanges generate:
A. surplus, leaving both participants better off than they were before. B. deadweight loss, leaving both participants worse off than they were before. C. deadweight loss, leaving at least one participant worse off than they were before. D. a transfer of surplus from one participant to another.