If at full employment the government wants to increase its spending by $100 billion without increasing inflation in the short run, it must do which of the following?
A) Raise taxes by more than $100 billion
B) Raise taxes by $100 billion
C) Raise taxes by less than $100 billion
D) Lower taxes by $100 billion
E) Lower taxes by less than $100 billion
Answer: A) Raise taxes by more than $100 billion
You might also like to view...
All of the following have been proposed as reasons for an unusually high level of uncertainty following the financial crisis of 2007-2009 EXCEPT:
A) the severity of the financial crisis B) concerns of small businesses regarding how the Affordable Care Act would affect the cost of hiring workers C) concerns by households and firms regarding potential tax increases and spending cuts scheduled to take place in January 2013 D) the Fed indicating that it would withdraw stimulus as soon as there was any evidence of economic recovery
If the world price of steel is greater than the U.S. "no-trade" domestic equilibrium price of steel, the United States:
a. will not produce steel. b. will demand steel from the rest of the world. c. will supply steel to the rest of the world. d. will not trade steel. e. will have a shortage of steel in the domestic market.
Which of the following will reduce the supply of motorcycles?
a. an increase in the population age 16 to 35, the primary consumers of motorcycles b. an increase in taxes imposed on motorcycle producers c. a technological improvement reducing the production costs of motorcycles d. a government study that reveals motorcycle riders, on average, live 10 years longer than those who don't ride motorcycles
Which of the following is NOT a characteristic of a perfectly competitive market?
A. a large number of firms in a market B. selling a standardized product C. substantial barriers to entry D. an individual firm having no control over price