Which of the two fiscal stimulus tools will ultimately have the same impact on aggregate spending?
A. $100 billion tax cut and $100 billion increase in government spending.
B. $100 billion increase in transfer payments and $100 billion in tax cuts.
C. $100 billion increase in government spending and $100 billion increase in transfer payments.
D. All of the choices are correct.
Answer: B
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Which of the following statements is true?
A) Economics does not provide insights into human behavior. B) Economic reasoning tends to reduce the quality of decision making. C) Economics is concerned with money, not choices. D) Economics can be used to predict people's actions.
Suppose the U.S. Government banned the sale and production of cigarettes. What are likely effects of this action on the market for cigarettes?
When technology spillover occurs,
a. it is the government's responsibility to own firms that are engaged in high-tech research. b. a firm's research yields technological knowledge that can then be used by society as a whole. c. those firms engaged in technology research should be taxed by the government. d. firms invest in the latest production technology and the cost of that technology "spills over" to the prices consumers must pay for the product.
Suppose that the economy is at long-run equilibrium. If there is a sharp rise in the stock market combined with a significant increase in the minimum wage, then in the short run
a. real GDP will rise and the price level might rise, fall, or stay the same. b. real GDP will fall and the price level might rise, fall, or stay the same. c. the price level will rise, and real GDP might rise, fall, or stay the same. d. the price level will fall, and real GDP might rise, fall, or stay the same.