If the government were to increase taxes, it would be enacting:
A. expansionary budgetary policy.
B. contractionary monetary policy
C. expansionary fiscal policy.
D. contractionary fiscal policy.
Answer: D
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If the monthly unemployment rate increase mentioned in the Application was a temporary aberration, the best economic decision by the committee would be to
A) not change monetary policy. B) increase the money supply to stimulate the economy. C) decrease the money supply to stimulate the economy. D) decrease the money supply to slow the economy down.
According to the Keynesian model with fixed money wages, real wages should be
a. negatively correlated with changes in output. b. positively correlated with changes in unemployment. c. negative correlated with changes in the price level. d. fixed as well. e. both a and c.