Explain the differences between expansionary and contractionary fiscal policies, and list the typical actions that are used for expansionary and contractionary fiscal policies
What will be an ideal response?
Expansionary fiscal policy is intended to increase real GDP and employment by increasing aggregate expenditure. Expansionary fiscal policy actions include increases in government purchases, reductions in taxes, and increases in transfer payments.
Contractionary fiscal policy is intended to reduce increases in aggregate expenditure that seem likely to lead to inflation. Contractionary fiscal policy actions include decreases in government purchases, increases in taxes, and reductions in transfer payments.
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The principle of comparative advantage was first explained by David Ricardo in the early 1800s.
Answer the following statement true (T) or false (F)
Which of the following describes the difference between the market demand curve for a perfectly competitive industry and the demand curve for a firm in this industry?
A) The market demand curve is downward sloping; the firm's demand curve is a vertical line. B) The market demand curve is downward sloping; the firm's demand curve is a horizontal line. C) The market demand curve is a horizontal line; the firm's demand curve is downward sloping. D) The market demand curve can not have a constant slope; the firm's demand curve has a slope equal to zero.
Explain how unemployment changes over the business cycle. Why do these changes occur?
What will be an ideal response?
In the United States, the distribution of wealth
A. is the same as the distribution of income. B. is equal for all families. C. is more equal than the distribution of income. D. is more unequal than the distribution of income.