What is the goal of fiscal policy, and what tools have policymakers traditionally used to conduct fiscal policy?
What will be an ideal response?
The goal of fiscal policy is to reduce the severity of economic fluctuations, and is focused primarily on employment and production. Traditional policy tools of fiscal policy are changes federal government purchases of goods and services, changes in federal taxes, and changes in transfer payments.
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A hedge is
A) a financial strategy that reduces the change of suffering losses arising from foreign exchange risk. B) an exchange rate arrangement in which a country pegs the value of its currency to the exchange value. C) the possibility that changes in the value of a nation's currency will result in variations in the market value of assets. D) active management of a floating exchange rate on the part of a country's government.
Dent 'n' Scratch Used Cars and Trucks employs 3 salesmen. Data for their sales last month are shown in this table: Cars Sold Trucks SoldLarry105Joe99Ralph312Based on last month's data, Joe's opportunity cost of selling a car is ________ than Ralph's, and Joe's opportunity cost of selling a car is ________ than Larry's.
A. greater; greater B. less; greater C. less; less D. greater; less
Refer to the graph shown. The economy begins at a level of output of $50 billion and experiences a one-year recession in which output declines by 3 percent. By what rate must the economy expand to return to potential output by year 2?
A. About 3 percent B. About 9 percent C. About 6 percent D. About 4 percent
Luke won tickets to see a rock music concert. Even though Luke is a rhythm and blues fan, he goes to the concert anyway. Twenty minutes later, Luke decides he hates the music and the screaming fans, and he walks out an hour before the concert is scheduled to end. Luke's behavior demonstrates what economic concept?
A. Rational behavior B. The fungibility of money C. Irrational behavior D. None of these explain Luke's behavior.