Suppose the actual budget deficit increases when the economy falls into a recession. This is an indication that
A) monetary policy was used during the recession.
B) monetary policy was not used during the recession.
C) fiscal policy was used during the recession.
D) fiscal policy was not used during the recession.
C
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If a major technological breakthrough occurs, then the:
a. investment demand curve will shift downward. b. investment demand curve will shift upward. c. consumption function will shift downward. d. consumption function will shift upward. e. economy will move to a new point along the existing investment demand curve.
Answer the next question on the basis of the following consolidated balance sheet of the commercial banking system. Assume that the reserve requirement is 10%. All figures are in billions.Assets (billions of dollars)Liabilities & Net Worth (billions of dollars)Reserves$60Checkable deposits$600Securities140Stock shares260Loans260 Property400 Suppose the Fed wants to increase the money supply by $400 billion to drive down interest rates and stimulate the economy. Assuming that the money multiplier is operating to full effect, to accomplish the desired increase, the Fed could ________.
A. sell $40 billion of U.S. securities to the banks B. sell $20 billion of U.S. securities to the banks C. buy $20 billion of U.S. securities from the banks D. buy $40 billion of U.S. securities from the banks