Q37. Government demand-management policies that are used to try to increase the

Question

Q37. Government demand-management policies that are used to try to increase the equilibrium level of output in the economy are known as
   a. expansionary policies
   b. fiscal dividends
   c. output policies
   d. laissez-faire policies

Q38. 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

Q39. The Federal Reserve usually increases interest rates during inflationary periods.
   a. true
   b. false

Q40. Fiscal drag refers to the
   a. slowing effect on the economy that results from a government budget deficit
   b. stimulating effect on the economy that results from a government budget deficit
   c. stimulating effect on the economy that results from a government budget surplus
   d. slowing effect on the economy that results from a government budget surplus

Q41. As interest rates rise,
   a. the temptation to borrow increases
   b. the cost of carrying the national debt rises
   c. the likelihood of a surplus budget increases
   d. the need for deficit spending to reinvigorate the economy grows

Explanation / Answer

37

expansionary policies

this means the government might use fiscal spending to increase the aggregate demand to expand the economy

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