The aggregate demand shifts to the left if
A) the government increases spending.
B) the Fed sells government bonds.
C) the government decreases taxes.
D) the Fed decreases the required reserve ratio.
Answer: B) the Fed sells government bonds.
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Many economists believe that
A. once a negative income tax system was in place, the United States could increase economic equality indefinitely without reducing economic efficiency. B. a negative income tax would be less efficient than the current welfare system. C. replacing the current welfare system with a negative income tax would increase both economic efficiency and economic equality. D. None of the above is correct.
If a person were given the choice of a $500 credit or a $500 deduction,
A. he would take the deduction if he were poor but the credit if he were rich. B. he would take the deduction if he were rich but the credit if he were poor. C. he would take the deduction every time. D. he would take the credit every time.