Mainstream macroeconomics would suggest that fiscal policy
A. has no effect unless the fiscal policy is accompanied by changes in the money supply.
B. changes aggregate demand and GDP by changing aggregate expenditures.
C. is relatively ineffective because the outcomes are anticipated and offset.
D. affects GDP and the price level through changes in aggregate supply.
Answer: B
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A monopolist will not produce at all if the intersection of marginal revenue and marginal cost occurs at a quantity at which average cost lies above the demand curve.
Answer the following statement true (T) or false (F)
Bank reserves will increase over time when:
a. the Fed sells government securities on the open market. b. the Treasury sells government securities on the open market. c. depositors take funds out of their checkable deposit accounts. d. the Fed buys government securities on the open market. e. the Fed lowers the discount rate.
Assuming that resources are specialized, the opportunity cost of an item increases as production of it rises. Therefore, we expect that firms will produce more if
a. the price increases. b. the price decreases. c. the opportunity cost is greater than the price. d. government asks firms to produce more. e. the income of buyers increases.
Why is voluntary exchange an important source of economic prosperity?
A) All of the above are correct. B) It makes it possible to produce a larger output as a result of gains from division of labor and specialization. C) It makes it possible to produce a larger output as a result of lower per unit costs that often accompany large-scale production. D) It moves goods from people who value them less to people who value them more.