Which of the following fiscal policy actions would definitely cause a reduction in the size of an inflationary gap?
A) cuts in taxes and increases in government spending
B) increases in government spending
C) increases in taxes
D) cuts in taxes
Ans: C) increases in taxes
Economics
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Explain what happens to the money supply, interest rates, investment spending and GDP when the Fed makes open market bond purchases
What will be an ideal response?
Economics
A price ceiling that is set above the equilibrium price
A) causes suppliers to raise their prices. B) is binding. C) is non-binding. D) creates a shortage.
Economics