If unemployment is the major problem in the economy, which of the following would be an appropriate monetary policy response?
a. decrease taxes
b. decrease the discount rate
c. sell government bonds
d. all of the above
b
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Recent research estimates that the short-run price elasticity of demand for gasoline in the U.S. is -0.3, and the long-run price elasticity of demand is -1.4. What happens if the government increases the federal gasoline tax?
A . Consumer expenditures on gasoline decrease over the short run and long run. B. Consumer expenditures on gasoline increase over the short run and decline over the long run. C. Consumer expenditures on gasoline decline over the short run and increase over the long run. D. Consumer expenditures on gasoline increase over the short run and long run.
A lump-sum tax
a. is most frequently used to tax real property. b. does not distort incentives. c. distorts incentives more than any other type of tax. d. is the most fair tax.