Government decreasing taxes is an example of:
A. contractionary monetary policy.
B. contractionary fiscal policy.
C. expansionary monetary policy.
D. expansionary fiscal policy.
Answer: D
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Which of the following statements about private and social costs is TRUE?
A) Social costs include externalities. B) Private cost do not include externalities. C) Social costs are never smaller than private costs. D) All of the above.
As a result of contractionary monetary policy
A) interest rates fall, the dollar depreciates, and domestic goods become cheaper, thereby reducing net exports. B) interest rates rise, the dollar appreciates, and domestic goods become more expensive, thereby reducing net exports. C) interest rates rise, the dollar appreciates, and domestic goods become cheaper, thereby reducing net exports. D) interest rates rise, the dollar appreciates, and domestic goods become cheaper, thereby increasing net exports.
Suppose a family has saved enough for a 10 day vacation (the only one they will be able to take for 10 years) and has a utility function U = V1/2 (where V is the number of healthy vacation days they experience). Suppose they are not a particularly healthy family and the probability that someone will have a vacation-ruining illness (V = 0) is 20%. What is the expected value of V?
a. 10 b. 8 c. 2 d. 0
If the price of labor is constant and a firm experiences diminishing marginal product, then its
A. marginal costs increase. B. total costs decrease. C. marginal costs decrease. D. fixed costs increase.