A Supply-Side Policy Approach in Figure 8

question 80

Multiple Choice

A supply-side policy approach in Figure 8.3,given AD₁ and AS₁,to achieve both lower prices and more output would be to

• A)Increase the growth of the money supply.
• B)Reduce marginal tax rates and government regulation in an effort to move AS₁ to AS₂.
• C)Wait until natural market forces establish full employment.
• D)Increase aggregate spending.

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Definitions:

Assets

Resources with economic value that an individual, corporation, or country owns or controls with the expectation that it will provide future benefit.

Checkable Deposits

Bank account balances that can be accessed using checks, debit cards, or electronic transfers and are very liquid.

Required Reserve Ratio

The fraction of deposits that banks are mandated by regulation to hold in reserve and not lend out.

Excess Reserves

The banks' reserves over and above the required minimum that they choose to hold rather than loan out.