The fiscal policy target for achieving full employment when an inflationary gap exists is known as the
A. AD excess.
B. Fiscal restraint.
C. AD shortfall.
D. Fiscal stimulus.
Answer: A
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Which of the following is an appropriate fiscal policy prescription that addresses the inflation that occurs when the economy is above potential GDP?
a. Decreasing taxes to protect consumers from the effects of inflation b. Increasing taxes to reduce aggregate demand c. Increasing government spending to provide some of the goods that consumers can no longer afford at the higher prices d. Decreasing government spending to cause a decrease in the demand for money e. Increasing transfer payments to poor people, who are hurt the most by the inflation
Which of the following statements is true?
A. People regard human life as priceless when making choices involving risk. B. Economists calculate the value of life on the basis of the cost of dying. C. Only economists behave as if life has a finite value. D. People make decisions every day that reflect the valuations they place on their own lives.
Most economists think that it is impossible to prevent asset price bubbles.
Answer the following statement true (T) or false (F)
The ________ supply curve(s) of a perfectly competitive firm is the portion of its marginal cost curve that lies above its average variable cost curve.
A. short-run B. short-run and long-run C. long-run D. A perfectly competitive firm faces no supply curve.