Question 27 \"The gap between actual and potential output for this year is estim

Question

Question 27

"The gap between actual and potential output for this year is estimated to by 6 percent to 7 percent of potential output. Wholesale prices are virutally unchanged from one year ago. Unemployment is 8.8 percent of the civilian work force, the same level as three months ago."
Which of the following stabilization policies would be the most appropriate?

Question 28

In a period of sluggish growth, there is a debate on whether to stimulate the economy by means of a tax cut or an increase in public expenditures. In the short run, a tax cut, as opposed to an increase in government spending, is:

Question 30

"On the whole, statistics show that the velocity of money is high when the interest rate is high." Which of the following best explains this relationship?

Explanation / Answer

27)purchases of securities by the Federal Reserve

28)equally powerful on a per dollar basis, and favors private over public spending

30)the interest rate is a measure of the cost of holding money balances

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