Which of the following is an example of an automatic fiscal policy action?
A) increased unemployment payments resulting from higher unemployment
B) an increase in spending on defense goods resulting from increased world tensions
C) an increase in the tax rate resulting from a desire to shrink the budget deficit
D) a decrease in the tax rate resulting from an effort to increase aggregate demand to combat a recession
E) None of the above answers is correct.
A
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The slope of the consumption function equals the marginal propensity to consume
a. True b. False Indicate whether the statement is true or false
Suppose that the nominal value of GDP increased by approximately 2 percent during a given year, but real GDP decreased by 3 percent. Which of the following best explains these events?
a. The money supply decreased by approximately 5 percent. b. Prices fell by approximately 5 percent. c. Prices increased by approximately 5 percent. d. The real productive capacity of the economy increased by approximately 5 percent.
Rexar, Inc is generating total economic profits. Considering this, which of the following statements is accurate?
a. Total revenue is equal to total costs at 0. b. Total revenue is less than total costs at 0 c. Total revenue is greater than total costs at q*. d. Total revenue is equal to total costs at q*
You are the mayor of your home town, and one day you arrive at city hall to find angry voters demonstrating against you. They are mad because your office created a garbage-collection monopoly by awarding only one company a permit to collect garbage in your town. The voters claim that the company is overcharging and providing poor service. They want you to do something that will lower rates and improve service. You call your staff economist, who presents evidence that there are substantial economies of scale to garbage collection. What are your options if you are interested in efficiency?
What will be an ideal response?