The primary tools the government uses for contractionary fiscal policy are
A. tax increases and government purchase reductions.
B. tax reductions and government purchase increases.
C. tax increases and government purchase increases.
D. tax reductions and government purchase reductions.
Answer: A
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Consumers maximize total utility within their budget constraint by
A) spending the same dollar amount for each good. B) buying the cheapest goods they can find. C) buying whatever they like the best. D) buying the goods with the largest marginal utility per dollar spent.
If Alan Shaw reduces his work hours when his salary increases, then
A) the substitution effect of his salary increase dominates the income effect. B) leisure is an inferior good to Alan. C) the income effect of his salary increase dominates the substitution effect. D) the income effect of his salary increase is completely offset by the substitution effect.
The "rational expectations" school of economists, including Robert Lucas and Thomas Sargent, argue that changes in monetary policy cannot affect unemployment rates in the short run or long run
Indicate whether the statement is true or false
Which of the following is not a coincident indicator of the business cycle?
a. Unemployment claims b. Payroll employment c. Industrial production d. Personal income e. Manufacturing and trade sales