Question Details

A reduced rate of inventory liquidation contributes to the recovery 



1. "The only other potential bright spot observers spy on the horizon is lower personal tax rates and higher take-home pay under the federal tax reform package, that will begin in July." This is viewed as a bright spot because 
a) people like lower taxes b) lower taxes will combat inflation 
c) lower taxes will stimulate the economy 
d) lower taxes lower the income level through the multiplier process 
2. "But in a loose sense, we are all Keynesians now - all of us, at any rate, who reject the notion that a sick economy heals itself by 'natural' recuperative powers, without government action." This suggests that faced with a sick economy Keynesians would recommend 
a) doing nothing b) a stimulating fiscal policy 
c) a stimulating monetary policy d) either or both of b) or c) above 
3. "The report attributed the strength of the recovery during the first three months of this year to increased consumer spending and residential construction, as well as a reduced rate of inventory liquidation." A reduced rate of inventory liquidation contributes to the recovery because it is caused by 
a) lower aggregate supply which increases income and causes multiplier effects 
b) higher aggregate supply which increases income and causes multiplier effects 
c) higher aggregate demand which stimulates the economy and causes multiplier effects 
d) lower aggregate demand which stimulates the economy and causes multiplier effects 
4. "There have been times when the federal government has kept pumping fiscal stimulus into the economy when it was already growing vigorously and did not need the boost. The result was ......" Complete this clipping. 
a) higher taxes b) higher inflation 
c) higher unemployment d) more discouraged workers 
5. "Manufacturers ended last year on a strong note with both shipments and orders rising to record levels in December. At the same time there was an ominous buildup of inventories, which also rose to a record level." The buildup in inventories is ominous because it suggests that 
a) inflation is heating up b) unemployment will develop 
c) inventory taxes will be increased d) encouraged workers will increase




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