Suppose That the Goal of Policy Were to Increase GDP

question 31

Multiple Choice

Suppose that the goal of policy were to increase GDP without putting upward pressure on interest rates. If the IS-LM construction displayed the usual slopes, then an appropriate mix of policies would be

• A) a reduction in the money supply coupled with a reduction in government spending.
• B) an increase in government spending, a reduction in taxes, and an increase in the supply of money.
• C) a reduction in the supply of money coupled with an increase in taxation.
• D) an increase in government spending coupled with some strict price controls that would fix the price level at the original level.
• E) none of the above.

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Definitions:

Physiological Needs

Fundamental human requirements for sustaining life, including air, water, food, shelter, and sleep, critical for survival.

Safety Needs

As identified by Maslow, these are the second level of human needs in his hierarchy, including personal and financial security, health, and well-being, and protection against accidents or harm.

Humanistic Approach

A psychological perspective emphasizing the study of the whole person and their uniqueness, focusing on their potential for personal growth.

Free Will

The concept that human beings have the power to make choices that are not determined by natural or divine forces.