Which one of the following is TRUE about the effects of fiscal policy?
A) A decrease in government spending will decrease aggregate demand.
B) A tax change does not have any direct or indirect effects on aggregate demand.
C) A decrease government spending will increase aggregate supply.
D) An increase in government spending will reduce aggregate demand.
A
You might also like to view...
International trade benefits
A) only the exporter. B) only the importer. C) both the exporter and the importer. D) neither the exporter nor the importer. E) the exporter at all times and sometimes also the importer.
Short-run macroeconomic equilibrium occurs when the quantity of real GDP demanded ________
A) equals potential GDP B) equals full-employment GDP C) does not equal full-employment GDP D) equals the quantity of real GDP supplied
In the figure above, the opportunity cost of moving from point C to point D is
A) the loss in production in the health care sector. B) the increase in production in the education sector. C) zero. D) the loss in production in the education sector.
A contract containing an adjustment provision which allows the supplier to recover a fraction of his additional costs when input prices cross a certain level, is considered efficient because:
a. it reallocates the supplier's risk while checking his activities. b. it reallocates risks completely to the buyers. c. it allows the supplier to take up risks. d. it allows the buyers to partially reallocate their risks.