When tradable allowances are used to correct negative externalities in a market, the outcome:
A. maximizes surplus.
B. limits the quantity bought and sold to the efficient level.
C. is efficient.
D. All of these statements are true.
Answer: D
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When automatic fiscal stabilizers are in place, a shock that causes a fall in the level of economic activity automatically
a. results in a decline in the federal budget deficit that lessens the fall in income. b. results in a rise in the federal deficit that lessens the fall in income. c. requires the federal government to balance the budget. d. will lead to a permanent increase in the budget deficit. e. both a and b
Western expansion contributed to U.S. growth and development of the economy by
(a) privately mobilizing idle natural resources and land. (b) placing land in the hands of the public, with no private rights. (c) having government officials set land prices. (d) all of the above.
Which of the following is true?
a. The best distribution of income can be determined objectively. b. The transfer of income from one group to another is costly; it will generally reduce total output. c. Positive economics can determine the variation in incomes that would be best for an economy. d. The fairness of an income distribution is determined by its pattern (the measured degree of income inequality). e. All of the above are true.
The use of government expenditures and taxes to influence the level of economic activity is called
A) deficit management policy. B) debt management policy. C) financial policy. D) fiscal policy.