Which of the following is an appropriate fiscal policy prescription that addresses the inflation that occurs when the economy is above potential GDP?
What will be an ideal response?
increasing taxes to reduce aggregate demand
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The ________ view says that fiscal stimulus has a multiplier effect that makes it a ________ tool to fight a deep recession
A) Keynesian; weak B) "free lunch"; powerful C) Keynesian; powerful D) mainstream; powerful E) None of the above answers is correct.
Refer to Table 4.2. With which scenario will you be best off by investing in Japanese bonds instead of U.S. bonds?
A) A B) B C) C D) D
Which of the following policies could the Fed use to lower the interest rate?
a. A tax cut. b. Selling government securities. c. Raising the discount rate. d. Reducing the required reserve ratio.
Recessionary gaps are most likely to be accompanied by
a. inflation. b. inventory reductions. c. unemployment. d. expanding output.