Answer (A) Increasing government expenditures to build highways
All of the others are monetary policy.
Answer (B) It is the accumulation of past and current budget deficits and surpluses.
Answer (A)
Lower business taxes mean lower costs for business. AS curve shifts right (input costs decrease, PL decreases) & MC curve shifts right, and to produce at profit max, (produce more) a business must higher more labor. In an imperfectly competitive firm price will decrease.
Answer (B) gov't borrowing to finance its spending decreases private sector investment.
Answer (D) the automatic stabilizing effect of fiscal policy will be eliminated
Answer (C) decrease income taxes and increase gov't spending by equal amounts.
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