If the economy is near full employment and Congress cuts taxes, the proper monetary policy should be
A. expansionary to keep the economy fully employed.
B. expansionary to counteract the increased deficit.
C. contractionary to shift the aggregate demand curve outward.
D. contractionary to counteract the effects of fiscal policy.
Answer: D
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If capital is measured on the vertical axis and labor is measured on the horizontal axis, the slope of an isoquant can be interpreted as the
A) rate at which the firm can replace capital with labor without changing the output rate. B) average rate at which the firm can replace capital with labor without changing the output rate. C) marginal product of labor. D) marginal product of capital.
If in the long run, any government policy that increases exports
A) also increases imports. B) decreases imports. C) has no impact on imports. D) makes imports become negative.