Contractionary fiscal policy is enacted when the overall effect of decisions about taxation and spending is to:
A. increase aggregate demand.
B. increase aggregate supply.
C. reduce aggregate demand.
D. reduce aggregate supply.
Answer: C
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Opportunity cost is the combined value of all of the other alternatives that go unselected.
Answer the following statement true (T) or false (F)
Which of the following is NOT true of an insolvent bank?
A) Its net worth is negative. B) It may be unable to pay off its depositors. C) The value of its assets is less than the value of its liabilities. D) It must have no more deposits.
Which of the following is not a potential drawback to public provision of public goods?
a. Public provision lacks clear signals about the value of the good being produced, possibly leading to under and over provision of the goods. b. Many collective consumption goods might be overproduced private goods. c. Public provision often implies taxation, which creates an excess burden that might overwhelm any efficiency gains. d. Many collective consumption goods are really impure private goods and thus the efficient level of output is never reached.
The highest valued alternative that must be given up in order to choose an option is called the:
A. opportunity cost. B. utility cost. C. scarcity expense. D. accounting cost.