Critics of supply-side economics agree that shortly after the Reagan tax cuts were put into place, the economy began to expand. These critics, though, argue that the expansion did not result from the supply-side policies, but rather from
A. the fact that the Federal Reserve dramatically increased the money supply at the same time that the tax cuts became effective.
B. a very large increase in the demand for U.S. exports at the same time that U.S. imports fell dramatically.
C. the self-correcting nature of the economy.
D. the increases in government spending that occurred at the same time the tax cuts became effective.
Answer: A
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Refer to Figure 16-2. In the graph above, if the economy is at point A, an appropriate fiscal policy by Congress and the president would be to
A) execute an open market sale of government securities. B) increase marginal income tax rates. C) increase government transfer payments. D) lower the discount rate of interest.
The SDR (Special Drawing Rights) is issued by the
A) IMF. B) Federal Reserve Bank. C) European Monetary System. D) World Bank.