In recent decades, the fiscal tool most often chosen by policymakers has been tax reductions.
What will be an ideal response?
s. (Tax reductions, of course, tend to be politically popular in addition to providing economic stimulus.) Increases in transfer payments would have the same general positive effect on aggregate demand. The opposite policies—increasing taxes or decreasing transfer payments—would have a negative effect on economic equilibrium, similar to a reduction in government spending
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Refer to Figure 3-3. The figure above shows the supply and demand curves for two markets: the market for original Michelangelo sculptures and the market for Ray Ban sunglasses. Which graph most likely represents which market?
A) Graph A represents the market for original Michelangelo sculptures and Graph B represents the market for Ray Ban sunglasses. B) Graph B represents both the market for original Michelangelo sculptures and Ray Ban sunglasses. C) Graph B represents the market for original Michelangelo sculptures and Graph A represents the market for Ray Ban sunglasses. D) Graph A represents both the market for original Michelangelo sculptures and Ray Ban sunglasses.
The ________ model focuses on the relationship between total spending and real GDP in the short run, assuming the price level is constant
A) supply and demand B) national income C) business cycle D) aggregate expenditure