Suppose the Economy Is Operating Below Potential Output

question 105

Multiple Choice

Suppose the economy is operating below potential output. If policy makers try to avoid a budget deficit by raising taxes or reducing government spending, these actions would

• A) increase inflation.
• B) help pull an economy out of a depression.
• C) make a recession worse.
• D) negate the multiplier effect.

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Definitions:

Employment Discrimination

Unfair treatment of employees or job applicants based on race, color, religion, sex, national origin, age, disability, or genetic information.

Family-Friendly

Describes policies, places, programs, or entertainments that are suitable for and supportive of families and children.

Cafeteria-Style Benefits

Employee benefit plans that allow individuals to choose from a variety of pre-tax benefit options, tailoring their benefits package to their personal needs.