Fiscal policy is the use of taxes and spending by the government to affect aggregate demand.
Answer the following statement true (T) or false (F)
True
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If Ann's utility function is U = W0.5, and she invests in a business which can yield $6,400 with probability 1/5, and $3600 with probability 4/5, then her expected wealth is
A) $1280. B) $2880. C) $4160. D) $5840.
Ricardian equivalence can be said to hold if:
a. taxation has greater effect on private spending than government borrowing. b. taxation has a lesser effect on private spending than government borrowing. c. government borrowing does not affect private consumption while taxation has a negative impact on private consumption. d. government spending activities financed by taxation and those financed by borrowing have the same effect on private spending. e. government spending activities financed by taxation and those financed by borrowing have no effect on private spending.
Which of the following is a Keynesian approach for dealing with a recession?
A. Raise taxes. B. Raise interest rates. C. Increase supply incentives for producers. D. Increase government expenditure.
At the output level defining allocative efficiency:
A. the areas of consumer and producer surplus necessarily are equal. B. marginal benefit exceeds marginal cost by the greatest amount. C. consumer surplus exceeds producer surplus by the greatest amount. D. the maximum willingness to pay for the last unit of output equals the minimum acceptable price of that unit of output.