If Policy Makers Wanted to Use Both Monetary and Fiscal

question 6

Multiple Choice

If policy makers wanted to use both monetary and fiscal policy to stimulate demand and reduce a high rate of unemployment, which of the following would be most appropriate?

• A) a larger budget deficit and the purchase of securities in the open market
• B) a government surplus and the sale of securities in the open market
• C) a larger government deficit and an increase in the discount rate
• D) a government surplus and a reduction in the discount rate

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Definitions:

Control Group

In experimental research, a group of subjects that does not receive the experimental treatment and is used as a benchmark to measure how the other tested subjects do.

Placebo

An inert or innocuous substance given to a patient instead of genuine medication, used in studies to evaluate the efficacy of treatments.

Confederate

An individual who is part of an experiment but pretends to be a participant and is aware of the study's aims.

Experimental

Pertaining to a methodological approach that involves manipulating one variable to determine if changes in one variable cause changes in another variable.