The government wishes to close an inflationary gap by reducing national income by $400 billion. Assuming a tax multiplier of 4 and an income multiplier of 5, which of the following policy prescriptions would reduce the inflationary gap by $400 billion?
a. decreasing government spending by $400 billion and increasing taxes by $400 billion
b. decreasing government spending by $160 billion and decreasing taxes by $100 billion
c. decreasing government spending by $40 billion and decreasing taxes by $40 billion
d. decreasing government spending by $80 billion and keeping taxes the same
e. doing absolutely nothing to the economy
B
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Raising the discount rate is: a. an expansionary policy because it raises the ratio of excess to total reserves in the banking system
b. a contractionary policy on the part of the member banks of the Fed because it raises the firms' costs of borrowing from them. c. a contractionary policy on the part of the Fed because it raises the commercial banks' cost of borrowing from it. d. an expansionary policy on the part of the member banks of the Fed because it raises their profits relative to those of the nonmember banks. e. an expansionary policy on the part of the Fed because increasing the interest rates that the banks are allowed to charge will increase their willingness to make loans.
In the U.S., it is illegal for employers to interfere when workers try to organize unions
a. True b. False Indicate whether the statement is true or false