A fiscal policy action to close an expansionary gap is to:
A. increase transfer payments.
B. decrease government purchases.
C. decrease taxes.
D. increase the marginal propensity to consume.
Answer: B
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Suppose the price level, the money wage, and the price of all other resources rise by 10 percent. This set of changes leads to
A) an upward movement along the LAS curve. B) a downward movement along the LAS curve. C) an upward movement along the SAS curve. D) a leftward shift of the LAS curve.
If a life insurance company does NOT require a medical exam of its policyholders, it is most likely that the company
A) charges above-average premiums. B) charges below-average premiums. C) charges no premiums. D) has only very healthy policyholders.
Commitment devices are:
A. methods to increase the price of your vices. B. methods to lower the price of your virtues. C. successful whether weak or strong, depending on the situation. D. All of these statements are true.
Budweiser typically purchases several 30 second advertising spots during the Super Bowl at a very high cost. Miller Brewing Co typically does not advertise during the Super Bowl. Which of the following is correct?
a. Budweiser chooses to signal during the Super Bowl, while Miller Brewing Co. does not. b. Budweiser chooses to screen during the Super Bowl, while Miller Brewing Co. does not. c. Miller does not advertise during the Super Bowl because it has a superior product and the audience already knows that. d. Budweiser's advertisements during the Super Bowl are entertaining but convey no information about the quality of its products.