Keynesian analysis stresses that a tax cut that increases the government's budget deficit or reduces its budget surplus:
A. is appropriate during a period of inflation.
B. will increase the money supply.
C. will stimulate aggregate supply and, thereby, promote employment.
D. will stimulate aggregate demand and, thereby, promote employment.
Answer: D
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When a nonprice change affects any of the four components of GDP the:
A. aggregate demand curve will shift left or right. B. economy will move up or down along the aggregate demand curve. C. aggregate demand curve will remain unaffected. D. aggregate supply with shift left or right.
When a household owns shares of stock, _____
a. it has ownership rights in that firm b. it is entitled to the majority of the firm's profits c. it is liable to bear the entire loss faced by the firm d. it can consume the firm's products without paying for it e. it is responsible for correcting any defect in the product identified by the customers
Stabilization policies are government policies used to affect ________, with the objective of eliminating output gaps.
A. diminishing returns to capital. B. labor productivity. C. planned aggregate expenditure D. potential output.
If a nation protects an industry because it believes that there are positive externalities in the production process, it is asserting that the free market will
A) produce less than is optimal from society's point of view. B) produce more than is optimal from society's point of view. C) produce the correct amount but charge too high a price. D) produce the correct amount but charge too low a price.