1)Which of the following policies would Keynesian economists recommend to lower

Question

1)Which of the following policies would Keynesian economists recommend to lower the rate price inflation in the U.S?
A)Congress increase government spending by $800 billion
B)Congress lowers income tax rates by half for all income levels
C)The federal reserve lowers the discount rate
D)The federal reserve sells U.S treasury securities
E)All the above


2) Which of the following would be considered the most expansionary set of fiscal policies?
A)Increase in government purchases, increase in taxes, and decrease in transfer payments
B)Decrease in government purchase, increase in taxes, and decrease in transfer payments
C)Increase in government purchase, decrease in taxes, and increase in transfer payments
D)increase in goverment purchases, increase in taxes and increase in transfer payments
E)Decrease in government purchase, decrease in taxes , and decrease in transfer payments

3)The discount rate is?
A)The interest rate charged by the federal reserve banks on loans to banking institutions
B)The interest rate banks charge each other for loans
C)The rate banks charge their best business customers
D)The rate of discounts that banks use to determined the true mortgage rate
E)The fraction of deposits that banks hold as reserves

Explanation / Answer

1. D (all the other policies increase AD and thus would potentially increase inflation) 2. C Focusing on consumption and government spending, anything that increases consumption and government spending would be an expansionary policy. Increasing government spending is obvious. Decreasing taxes and increasing transfer payments increase disposable income, increasing consumption spending 3. A by definition

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.