A decrease in real GDP would affect the U.S. economy by:
A. cutting tax revenues and raising government expenditures.
B. cutting government expenditures and raising tax revenues.
C. raising both tax revenues and government expenditures.
D. cutting both government expenditures and tax revenues.
Answer: A
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A natural monopoly is based on
a. diseconomies of scale b. diseconomies of scope c. external diseconomies d. economic freedom e. economies of scale
If the Fed wanted to shift to a restrictive monetary policy and reduce the money supply, it could
a. decrease the reserve requirements imposed on commercial banks. b. purchase U.S. government securities and other financial assets in the open market. c. decrease the interest rate on loans extended to banks and other financial institutions. d. increase the interest rate paid on excess reserves encouraging banks to hold excess reserves rather than extend more loans.