Refer to the above diagram, in which Qf is the full-employment output. If the economy's current aggregate demand curve is AD3, it would be appropriate for the government to:
A. reduce government expenditures or increase taxes.
B. reduce government expenditures and taxes by equal-size amounts.
C. increase government expenditures or reduce taxes.
D. reduce unemployment compensation benefits.
Answer: A
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The Federal Reserve's credit policy refers to
A) the Fed's direct lending to homeowners and students. B) regulations on terms on credit cards that banks issue. C) a direct credit on bank depositors' saving and checking accounts. D) the Fed's direct lending to financial and nonfinancial firms.
A price ceiling in the market for gasoline that is below the equilibrium price will lead to
A) the quantity demanded of gasoline exceeding the quantity supplied. B) an increase in the demand for gasoline. C) a decrease in the supply of gasoline. D) the quantity supplied of gasoline exceeding the quantity demanded. E) no change in the market since the price ceiling is below the equilibrium price.
If coal and oil are substitute inputs in the production of electricity, an increase in the price of oil
a. will increase the demand for coal b. will reduce the demand for coal c. will increase the supply of coal d. will reduce the supply of coal e. will not affect the demand for coal
Public goods differ from private goods in that:
A. they produce negative externalities. B. they are not scarce. C. their benefits cannot be denied to anyone. D. their consumption must be regulated by the government.