Q38. The most effective means of stimulating the economy during a recession is f
ID: 1199892 • Letter: Q
Question
Q38. The most effective means of stimulating the economy during a recession is for the federal government to
a. increase spending and hold taxes
b. hold government spending and decrease taxes
c. decrease government spending and hold taxes
d. decrease government spending and raise taxes
Q39. The tax rebate of 2008 is an example of
a. expansionary monetary policy
b. contractionary fiscal policy
c. contractionary monetary policy
d. pump priming
Q40. A decrease in the economy's capacity utilization rate
a. tends to decrease the unemployment rate
b. tends to increase the unemployment rate
c. has no impact on the unemployment rate
d. tends to have an unpredictable effect on the unemployment rate
Q41. When the federal budget is used as a tool for economic stabilization, the ideal goal is to
a. balance the budget over the entire business cycle
b. balance the budget each year
c. balance the budget during expansions
d. run a surplus during contractions
Q42. The gasoline tax is based on the principle of
a. cost of service
b. benefit received
c. ability to pay
d. equality of sacrifice
Q43. A loan is said to be productive if it
a. increases the purchasing power of the borrower
b. increases the present utility of the borrower's possessions
c. ultimately costs less to repay than it was worth when borrowed, due to inflation
d. increases the borrower's total output and profits
Explanation / Answer
38. The correct answer is option (A). The most effective means of stimulating the economy during a recession is for the federal government to increase spending and hold taxes.
39. The correct answer is option (C). The tax rebate of 2008 is an example of contractionary monetary policy.
40. The correct answer is option (B). A decrease in the economy's capacity utilization rate tends to increase the unemployment rate.
41. The correct answer is option (A). When the federal budget is used as a tool for economic stabilization, the ideal goal is to balance the budget over the entire business cycle.
42. The correct answer is option (B). The gasoline tax is based on the principle of benefit received.
43. The correct answer is option (D). A loan is said to be productive if it increases the borrower's total output and profits.
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