The Chunnel auto tunnel allows motorists to travel between England and France. As an alternative, there is ferry service across the English Channel. What would happen in the market for ferry service if fees for using the Chunnel were increased?
A. The demand for ferry service would increase.
B. There would be a downward movement along the demand curve for transits through the Chunnel.
C. The demand for ferry service would decrease.
D. There would be an upward movement along the demand curve for transits through the Chunnel.
Answer: A
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The time lags, which must be either reduced or known with some precision if fiscal policy is to be an effective stabilizing technique, are the lags between
A) the beginning of a cyclical movement and its recognition. B) the decision that compensatory action should be taken and the enactment of tax or expenditure changes. C) the increase or decrease in net government receipts and their final effects on total spending. D) all of the above, because a significant miscalculation with respect to any of these lags could increase aggregate instability.
Using the above figure, which of the lines in the above diagram represents a regressive tax?
A) A B) B C) C D) none of them
Risk pooling:
A. assures the individuals that they are less likely to have a catastrophe occur. B. reduces the risk of catastrophes happening collectively to groups. C. doesn't reduce the chances of catastrophes happening to individuals. D. None of these statements is true.
Discretionary fiscal policy
A. is the use of the money supply to maintain stable prices. B. is the purchase and sale of Treasury securities to influence economic growth and inflation. C. is the use of regulation to influence economic growth and inflation. D. is the use of government spending and tax policies to influence economic growth and inflation.