Which one of the following is an example of discretionary fiscal policy used to correct an inflationary gap?
A) an increase in government expenditures approved by Congress
B) decrease in the money supply by the Federal Reserve
C) a tax increase passed into law by Congress
D) an agreement among major banks to lower interest rates
C
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If a consumer is relatively insensitive to changes in the price of a good, then the consumer's demand for the good is
A) elastic. B) unit elastic. C) inelastic. D) perfectly elastic.
What differentiates a savings deposit from a small-denomination certificate of deposit (CD)?
A) A CD has a fixed maturity date; a savings deposit can be withdrawn at any time. B) A savings deposit cannot be withdrawn before its maturity date without incurring a penalty; funds in a CD are available at any time with no interest penalty. C) Only a savings deposit is a time deposit. D) All depository institutions accept savings deposits, whereas only a thrift institution can issue a CD.