Fiscal policy is the set of central bank policies, institutions, and bank behavioral patterns governing the availability of bank checking deposits and currency in circulation.
Answer the following statement true (T) or false (F)
False
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A central concept of New Keynesian macroeconomics is that in setting prices and wages, self-interested firms and workers are acting
A) irrationally, since their self-interest is badly damaged by the ensuing business cycles. B) irrationally, since this imposes business cycles on everyone not part of their arrangements. C) rationally, since they do not bear a fully offsetting cost of business cycles. D) rationally, since the total welfare loss of business cycles must be small enough to justify the price and wage setting.
Single-owner proprietorships often unintentionally exaggerate their profits because they
A) forget their explicit losses. B) look at after-tax instead of pre-tax costs. C) pay their bills late and therefore incur large interest charges. D) neglect to consider the opportunity cost of the owner's labor.
Because increases in inflation reduce aggregate spending and short-run equilibrium output:
A. the aggregate demand curve is horizontal. B. the aggregate demand curve is downward sloping. C. the aggregate demand curve is upward sloping. D. the short-run aggregate supply line is downward sloping.
The benefits principle states that the users of a service should pay for that service.
Answer the following statement true (T) or false (F)