If the economy is in an inflationary gap, which of the following is the least appropriate policy mix?
A. A budget surplus and expansionary monetary policy
B. A budget deficit and expansionary monetary policy
C. A budget deficit and contractionary monetary policy
D. A budget surplus and contractionary monetary policy
Answer: B
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Suppose the demand curve for a product is downward sloping and the supply curve is upward sloping. If a unit tax is imposed in the market for this product
A) the tax burden will be shared among the government, buyers and sellers. B) buyers bear the entire burden of the tax. C) the tax burden will be shared by buyers and sellers. D) sellers bear the entire burden of the tax.
Which of the following is most likely to be characterized by substantial asymmetric information?
a. a soft drink purchased in a vending machine b. a car wash to benefit the local high school band c. a collectible baseball card purchased on eBay d. wireless service that includes unlimited minutes and texting
The wage premium in the United States represents a
a. cost of higher education. b. decreasing return to higher education. c. higher return to college education. d. result of declining college attendance since 1973.
A common solution to the free-rider problem is for
a. government to subsidize consumption of the good. b. government to provide the good and then pay for its production through taxation. c. government to provide vouchers to consumers of the good.