Government stabilization policy
A. cannot influence investment spending.
B. can stimulate aggregate demand and thereby induce businesses to invest, but the amount is not totally predictable.
C. can stimulate aggregate demand, but investment spending will not be affected.
D. can stimulate aggregate demand, but only in the long run.
Answer: B
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Aggregate supply changes much faster than aggregate demand
Indicate whether the statement is true or false
The above figure shows the short run cost curves for a typical firm in a competitive market. If price = 8, then the firm
A) is earning positive profits. B) should produce 50 units. C) should shut down. D) None of above.
A market that has no barriers to entry and many small firms selling products that are slightly different from one another is best described as:
A. monopolistic competition. B. monopoly. C. perfect competition. D. oligopoly.
Taxes are of interest to
a. microeconomists because they consider how to balance equality and efficiency. b. microeconomists because they consider how best to design a tax system. c. macroeconomists because they consider how policymakers can use the tax system to stabilize economic activity. d. All of the above are correct.