Fiscal policy refers to the:
A. fact that equal increases in government spending and taxation will be contractionary.
B. manipulation of government spending and taxes to stabilize domestic output, employment, and the price level.
C. manipulation of government spending and taxes to achieve greater equality in the distribution of income.
D. altering of the interest rate to change aggregate demand.
Answer: B
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At its current production level, a monopolist's marginal revenue is $20 and its marginal cost is $10. Which of the following is CORRECT?
a. The monopolist should produce and sell more output. b. The monopolist should produce and sell less output. c. The monopolist is maximizing its profits at its current level of output. d. More information is required to decide if the firm needs to change its production.
The textile industry is composed of a large number of small firms. In recent years, these firms have suffered economic losses, and many sellers have left the industry. Economic theory suggests that these conditions will
a. shift the demand curve outward so that price will rise to the level of production cost. b. cause the remaining firms to collude so that they can produce more efficiently. c. cause the market supply to decline and the price of textiles to rise. d. cause firms in the textile industry to suffer long-run economic losses.