If policymakers are concerned that the economy is in danger of rising inflation because aggregate demand is increasing faster than aggregate supply, the appropriate fiscal policy response is to
A) increase taxes.
B) increase government spending.
C) use expansionary fiscal policy.
D) increase interest rates.
Answer: A
You might also like to view...
How would each of the following events likely change measured GDP?
a. The sale and use of marijuana is legalized. b. There is an increase in sales of counterfeit video games. c. A foreign-owned furniture manufacturer opens a production facility in South Carolina. d. More people choose to forgo their lawn maintenance services to take care of their own yards.
If a good is normal and its price decreases,
a. the income effect will be positive and the substitution effect will be positive. b. the income effect will be negative and the substitution effect will be negative. c. the income effect will be positive and the substitution effect will be negative. d. the income effect will be negative and the substitution effect will be positive.
Because information is costly to acquire,
a. people will rationally choose not to become fully informed when making decisions. b. people will generally choose to become as fully informed as possible when making decisions. c. people will generally choose to acquire no information that would be relevant to their decisions. d. none of the above are true.
?Kites /hourSnowboards /hourJesse81April123
Consider two individuals, Jesse and April, who hand paint kites and snowboards. Table 18.2 shows how much of each good Jesse and April can paint in one hour. Which of the following is TRUE?
A. April has a comparative advantage in painting kites but not snowboards. B. April has a comparative advantage in painting snowboards but not kites. C. April has a comparative advantage in painting both goods. D. April does not have a comparative advantage in painting either good.