Why might Congress find it easier to promote full employment than to curb inflation?
Tax cuts and more government spending are the tools Congress can use to promote full employment. Since
taxpayers like tax cuts, and the recipients of the extra government spending like that, Congress doesn't meet
with a lot of resistance and will be relatively inclined to practice expansionary policy when it is needed.
Tax increases and spending cuts, on the other hand, are necessary to curb inflation. These moves are much
less politically popular, and so are less likely to be taken by Congress when it needs to control inflation.
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The park in Hammerhead, Florida, built to honor the city's founding father, General Hammerhead, is starting to deteriorate. It would take about $5,000 to restore the General's statue, repair the benches, and repair the fountain, but the city budget is
tight. Also, the deterioration is not that noticeable. Mayor Grouper suggests delaying the repair until after the election, three years away. City Councilwoman Halibut notes that by then the park will be dilapidated, and repairs will cost $25,000 . From a public choice perspective, what is the likely outcome of this debate?
What ways do firms have to finance R&D activities? What is the cost of these forms of funding?
What will be an ideal response?
Related to the Economics in Practice on page 79: If a hurricane results in the supply of hotel rooms decreasing and the demand for hotel rooms increases, the equilibrium price for hotel rooms ________ and the equilibrium quantity of hotel rooms ________.
A. may increase, decrease, or stay the same; will decrease B. will increase; will decrease C. may increase, decrease, or stay the same; may increase, decrease, or stay the same D. will increase; may increase, decrease, or stay the same
Refer to the data. Plan C entails:
The following data are for a series of increasingly extensive flood control projects:
A. marginal benefits in excess of marginal costs.
B. fewer spillovers than either Plan A or Plan B.
C. an overallocation of resources to flood control.
D. an underallocation of resources to flood control.