If the U.S. government decides to eliminate a budget surplus by reducing taxes, the most likely effect would be
a. falling prices.
b. a reduction in the trade deficit.
c. an increase in unemployment.
d. upward pressure on prices.
d
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A Consumer Price Index of 120 for a certain year means that the average price of consumer items in that year was
A. 20% higher than the average price of the preceding year. B. 120% higher than the average price in the base period 1982-84. C. 20% higher than the average price in the base period 1982-84. D. about $120 per basket of consumer goods and services.
Activities that go unreported to the government in order to avoid paying taxes or because the activity is illegal are known collectively as the
a. non-profit sector b. federal sector c. illegal economy d. special-interest category e. underground economy
According to the quantity theory of money, which one of the following economic variables would change in response to an increase in the money supply?
a. prices b. real income c. velocity d. employment
The central bank of a country had, for a time, focused so strongly on reducing inflation that the level of unemployment increased beyond control. Currently, the central bank focuses so strongly on controlling unemployment that the inflation rate has increased. The main problem faced by the central bank is _____
a. it only focuses on a single factor b. it overestimates the inflation rate c. it does not consider the presence of disguised employment d. it is easily influenced by large business houses