Which of the following would be an example of expansionary fiscal policy?
A) An increase in the individual income tax rate.
B) Extending the period in which unemployed workers can collect unemployment benefits.
C) A decrease in the amount of federal grants given to college students
D) A decrease in interest rates.
Ans: B) Extending the period in which unemployed workers can collect unemployment benefits.
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Refer to Figure 7.1. Suppose that instead of $350, Angus earns only $250 by playing the bagpipes, but all other earnings remain the same. Who values the property rights to the air more?
A) Angus B) Dudley C) They value the property rights equally. D) Neither value the property rights.
Suppose the economy is at point B. If a recession in another country decreases exports, to what point might economy move in the short run?
A) It stays at point B. B) It shifts to a point such as A. C) It shifts to a point such as C. D) None of the above answers are correct because it is the SAS curve that shifts, not the AD curve.