When recessions are the result of slowing growth in potential output, the government's best policy is to:
A. reduce government spending.
B. promote saving and investment.
C. decrease aggregate supply.
D. increase aggregate demand.
Answer: B
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What does monopolistic competition have in common with monopoly?
A) a large number of firms B) a downward-sloping demand curve C) the ability to collude with respect to price D) mutual interdependence E) barriers to entry
When we calculate the price elasticity of demand, we use percentages of the average price and the average quantity in order to get the same value for the elasticity regardless of whether the price falls or rises
Indicate whether the statement is true or false
After a particular loan has been paid off, neither the borrower nor the lender has lost purchasing power. Therefore, it must be true that actual inflation was
a. greater than expected inflation. b. equal to expected inflation. c. less than expected inflation. d. greater than the nominal rate of interest.
Which of the following events will increase GDP?
a. losing $500 playing blackjack in your dorm b. selling an antique writing desk for $500 cash c. a burglar stealing your CD player d. the police department hiring an extra detective to track down the burglar who stole your CD player