Refer to the diagram. If the full-employment GDP is Y 5 , government should:
A. incur neither a deficit nor a surplus.
B. cut taxes and government spending by equal amounts.
C. reduce taxes and increase government spending.
D. increase taxes and reduce government spending.
C. reduce taxes and increase government spending.
You might also like to view...
The impact of an increase in the wage rate on labor demand is represented by ________, assuming all else equal
A) rightward shift in the demand curve for labor B) upward movement along the demand curve for labor C) leftward shift in the demand curve for labor D) downward movement along the demand curve for labor
In Singapore the government places a $5,000 tax on the buyers of new automobiles. After the purchase of a new car, a buyer must pay the government $5,000. How would the imposition of the tax on buyers be illustrated in a graph?
A) The tax will shift both the demand and supply curves to the right by $5,000. B) The tax will shift the demand curve to the right by $5,000. C) The tax will shift the supply curve to the left by $5,000. D) The tax will shift the demand curve to the left by $5,000.