Fiscal policy _____
Fill in the blank(s) with the appropriate word(s).
uses the federal government's powers of spending and taxation to affect employment, the price level, and GDP.
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The goal of expansionary fiscal policy with respect to output is to:
A. increase spending and shift aggregate demand to the right in an effort to reach full employment output. B. increase spending and aggregate demand to get back to an output level the government is comfortable with. C. decrease government spending in an attempt to get the private economy back on track. D. increase spending and shift aggregate demand to the left in an effort to reach full employment output.
The ceiling on the interest rate, setting a maximum rate that banks and S&Ls were allowed to pay depositors, was prescribed by
a. the FDIC mandate b. Regulation Q c. the Federal Reserve Board of Governors commission d. Continental Bank's charter e. the constitution of the First National Bank
Since externalities tend to keep markets from reaching a socially optimal equilibrium, government action
a. is always needed because private solutions can never be attained. b. is needed when private solutions fail to arise. c. will be needed only to correct for positive externalities. d. will be needed only to correct for negative externalities.
Tom Searchinger, a senior attorney at the Environmental Defense Fund, observed that generous farm subsidies have encouraged farmers to produce more corn and more wheat. How does this affect the market for fertilizer?
A) The supply of fertilizer increases. B) The supply of fertilizer decreases. C) The demand for fertilizer increases. D) The demand for fertilizer decreases.