The federal budget was in deficit from 1931 to 1939, except in the year 1937
Given this fact, how do you explain E. Cary Brown's statement, "Fiscal policy, then, seems to have been an unsuccessful recovery device in the 'thirties-not because it did not work, but because it was not tried."
Economist E. Cary Brown is arguing that while the actual federal budget was mainly in deficit during the Great Depression, the cyclically adjusted federal budget was in surplus, except for one year. Cyclically adjusting the budget calculates what revenues and expenditures would have been, had the economy been producing an output equal to potential GDP. The deficits in the 'thirties were due to a precipitous decline in tax revenues, not a substantial increase in government expenditures. A substantial increase in government expenditures was needed to pull the economy out of depression, and this did not occur. As a result, one might argue that discretionary expansionary fiscal policy was not pursued during the Great Depression.
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Takeovers and takeover attempts waste valuable capital.
Answer the following statement true (T) or false (F)
Under conditions of perfect competition, if a profitable firm pushes its output beyond the point where MR equals MC,
a. profits increase. b. profits diminish. c. AFC increases. d. AVC decreases.
Explain why when the demand curve for a good is elastic, a one percent reduction in the price of the good will increase a consumer's expenditure on the good
What will be an ideal response?
The Coase theorem states that
A. under certain conditions, private parties can arrive at the efficient solution without government involvement. B. the private sector will fail to produce the efficient amount of a public good because of the free-rider problem. C. public goods should be produced up to the point where the additional benefit received by society equals the additional cost of producing the good. D. if there are external costs in production, the government must intervene in the market to assure that the efficient level of output is produced.