Suppose the target rate of unemployment is 5 percent but the actual rate of unemployment is 4 percent. Given this information, which of the following policies is most appropriate according to the AS/AD model?
A. A tax cut
B. A tax increase
C. An increase in government spending
D. No change in taxes or government spending
Answer: B
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On the foreign exchange market, an increase in a country's exchange rate
A) decreases the demand for its currency and shifts the demand curve rightward. B) increases the quantity demanded of its currency and leads to a movement up along the demand curve. C) decreases the quantity demanded of its currency and leads to a movement up along the demand curve. D) decreases the demand for its currency and shifts the demand curve leftward. E) increases the quantity demanded of its currency and leads to a movement down along the demand curve.
Rent-seeking behavior creates:
A. waste and inefficiency. B. waste, but is efficient. C. inefficiencies, but not waste. D. efficiency without waste.
If the public has correct rational expectations and the Fed increases both reserve requirements and the discount rate, it would be expected to result in: a. a higher level of real output and a lower price level. b. a lower price level but no change in real output
c. a higher price level and a reduced level of real output. d. a higher price level but no change in real output.
The school that places primary emphasis on shifting the aggregate supply curve to achieve greater stabilization and economic growth is
a. classical economics b. neo-Keynesian economics c. supply-side economics d. Keynesian economics e. monetarist economics