Other things equal, contractionary fiscal policy will lead to:
a. an increased budget deficit (assuming an initial budget deficit).
b. a reduced budget surplus (assuming an initial budget surplus).
c. an expanded budget surplus (assuming an initial budget surplus).
d. increased government purchases.
c
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Creative destruction:
A) leads to the benefit of all economic agents. B) is more likely in an economy with extractive institutions. C) leads to losses of all economic agents. D) is more likely in an economy with inclusive institutions.
In the long run when a perfectly competitive firm experiences negative economic profits,
A) firms exit the industry, the market supply curve shifts rightward, and the market price falls. B) firms enter the industry, the market supply curve shifts rightward, and the market price falls. C) firms exit the industry, the market supply curve shifts leftward, and the market price rises. D) firms enter the industry, the market supply curve shifts rightward, and the market price rises.
In repeated games:
A. players no longer need commitment strategies to reach a mutually beneficial equilibrium. B. negative-negative outcomes are the only outcomes possible. C. players will never reach a mutually beneficial equilibrium. D. there are no dominant strategies.
Based on our understanding of the labor market model presented in Chapter 6, we know that an increase in the minimum wage will cause
A) an increase in the equilibrium real wage. B) a reduction in the equilibrium real wage. C) a reduction in the natural rate of unemployment. D) both B and C