Question 17 A country is experiencing inflation, and the government is consideri

Question

Question 17

A country is experiencing inflation, and the government is considering restricting aggregate private demand by either (1) increasing personal income tax rates, or (2) introducing a very tight monetary policy. If the government wishes to minimize the negative effect of its anti-inflationary policies on economic growth it should adopt:

Question 18

Which of the following is counted as "investment" in national income accounting?

Question 19

According to Keynesian theory, how will increasing government spending on goods and service when unemployment is 10 percent have a different effect from a similar increase when unemployment is 5 percent?

Question 20

Which of the following makes up the largest part of the "M1" money supply of the United States?

Question 21

According to the monetarists:

Question 22

Which of the following monetary policies would be most effective in combating inflation.

Explanation / Answer

17)the personal income tax increase because it restricts consumption expenditures more than investment.

18)Buying an existing house

19At 5 percent unemployment, it is more likely that government spending would require a sacrifice of private goods.

20)Federal Reserve notes

21)changes in the velocity of money are more important than changes in the money supply in causing the level of economic activity to change.

22)Reduce the discount rate.

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