13. If Congress passes legi slati on to raise taxes to control inflation, this w

Question

13. If Congress passes legi slati on to raise taxes to control inflation, this would be an example of an): a) Contractionary fiscal policy b) Contractionary monetary policy c Nondiscretionary fiscal policy d) Expansionary fiscal policy 14. Unanticipated inflation ben efits lenders and harms borrowers, ceteris paribus. a) True b) False 15. A shortage will occur whenever: a) b) c) d) Price is set above the equilibrium price Prices are decreasing The supply curve is upward sloping Price is set below the equilibrium price 16. Which wouldnot be considered as capital by an economist? a) An automobile used by General Electric bj A razor used by a barber c) A crane used by a building contractor d) A share of corporate stock issued by General Motors e) All of these are consi dered capital

Explanation / Answer

Answer.)

Q13.) a.) Contractionary fiscal policy

Governments engage in contractionary fiscal policy by raising taxes or reducing government spending.

Q14.) FALSE

Unanticipated inflation benefits debtors at the expense of creditors.

Q15.) d.) Price is set below the equilibrium price

Remember that demand curve is downward sloping and supply curve is upward sloping. Therefore There will always be shortage in case of "Price is set below the equilibrium price" because Quantity demanded is higher than quantity supplied.

Q16.) d.) A share of corporate stock issued by General Motors.

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