When the economy is in a recession, ________ taxes decrease while ________ spending increases and, as a result of this automatic fiscal policy, aggregate demand ________
A) induced; discretionary; is not changed
B) needs-tested; induced; decreases
C) induced; needs-tested; increases
D) discretionary; induced; is not changed
E) discretionary; needs-tested; increases
C
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How will a recession in the economies of our foreign trading partners affect US AD?
A. no effect on AD B. AD will increase C. AD will decrease D. depends on whether US offers financial aid to these countries
Which of the following statements is FALSE?
A) Both monetary and interest rate targets cannot be pursued simultaneously. B) A reduction in the required reserve ratio increases the money supply and pushes down the equilibrium interest rate. C) An open market purchase reduces the money supply and pushes down the equilibrium interest rate. D) An open market sale decreases the money supply and pushes up the equilibrium interest rate.