Which of the following policy options would not be used to eliminate an inflationary gap?
a. Decrease government spending.
b. Decrease consumption.
c. Increase investment.
d. Decrease taxes.
QUESTION 2The Federal Reserve's primary function is to control the money supply.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 3Karl Marx envisioned communism as an economic system that blends the best elements of capitalism and socialism.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 4Using the aggregate expenditure-output model, assume the aggregate expenditures (AE) line is above the 45-degree line at full-employment GDP. This vertical distance is called a(n):
a. inflationary gap.
b. recessionary gap.
c. negative GDP gap.
d. marginal propensity to consume gap.
QUESTION 5M2 is actually a smaller amount than M1.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 6Karl Marx predicted that the exploitation of workers would cause capitalism to self-destruct.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 7An inflationary gap is the amount by which aggregate expenditures ____ the amount required to achieve full-employment equilibrium GDP.
a. exceed
b. equal
c. fall short of
d. are greater than
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