The Fed can close a recessionary gap by:
a. increasing fiscal expenditure
b. increasing taxes.
c. decreasing taxes.
d. selling U.S. government bonds.
e. lowering the discount rate.
e
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Only one of the following statements is correct. The statements compare perfectly competitive (PC) markets and monopolistically competitive (MC) markets. Which statement is correct?
A) Productive efficiency is achieved in both PC and MC markets. Allocative efficiency is achieved only in MC markets. B) Allocative efficiency is achieved in both PC and MC markets. Productive efficiency is achieved only in PC markets. C) Productive efficiency and allocative efficiency are both achieved in PC markets. Neither is achieved in MC markets. D) Allocative efficiency is achieved only in PC markets. Productive efficiency is achieved only in MC markets.
How does an increase in government transfer payments affect aggregate demand?
A. It has the same effect as a tax increase, which lowers AD with a larger multiplier than a spending decrease. B. It has the same effect as a tax cut, which increases AD but with a smaller multiplier than a change in spending. C. It has the same effect as a spending increase, which increases AD with a larger multiplier than a tax cut. D. It has the same effect as a spending decrease, which increases AD with a larger multiplier than a spending decrease.