If the economy is experiencing less than full-employment, the Keynesian model recommends that the government
a. do nothing to stimulate the economy.
b. undertake expansionary fiscal policy to stimulate aggregate demand.
c. undertake expansionary fiscal policy to stimulate aggregate supply.
d. balance the budget to stimulate aggregate demand.
B
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Moral hazard:
A. is a normative judgement about the moral choices made by economic agents. B. is about actions and occurs after the parties have voluntarily entered into an agreement. C. is always present when adverse selection arises. D. All of these statements are true.
When sellers have better information about product quality than do buyers, lower-quality products tend to become more common in the market
a. True b. False
If demand is ________ with respect to price, a price increase will ________ total revenue.
A. inelastic; decrease B. unit elastic; decrease C. inelastic; increase D. elastic; increase
Suppose that the firm's only variable input is labor. When 50 workers are used, the average product of labor is 50 and the marginal product of labor is 75. The wage rate is $80 and the total cost of the fixed input is $500. What is average total cost?
A. $1.80 B. $0.825 C. $0.63 D. $4.10 E. none of the above