Which of the following fiscal policy changes would be the most expansionary?
A. A $40 billion increase in government spending
B. A $20 billion tax cut and $20 billion increase in government spending
C. A $10 billion tax cut and $30 billion increase in government spending
D. A $40 billion tax cut
A. A $40 billion increase in government spending
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All of the following are understandable economic reasons for reductions in consumer spending on durable goods except
A) economic uncertainty. B) increases in personal income taxes. C) declines in wealth levels. D) falling interest rates.
The nominal exchange rate is 15 crowns per florin, the domestic price level is 6 florins/bottle, and the foreign price level is 2 crowns/bushel
(a) What is the real exchange rate? (b) What is the real exchange rate in the foreign country? (c) If the domestic price level rises to 8 florins/bottle, what must the nominal exchange rate become if the real exchange rate remains unchanged?