Some economists argue that policymakers can use monetary and fiscal policy to reduce the severity of economic fluctuations. What are some things policymakers can do when higher inflation becomes a concern?
Policymakers can cut government spending, raise taxes, and reduce the money supply when aggregate demand is excessive.
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Diseconomies of scale can occur as a result of which of the following?
A) increasing marginal returns as the firm increases its size B) lower total fixed cost as the firm increases its size C) management difficulties as the firm increases its size D) greater specialization of labor and capital as the firm increases its size E) increases in the labor force not matched by increases in the plant
Costa Rica allows trade with the rest of the world. We can determine whether Costa Rica has a comparative advantage in producing pharmaceuticals if we
a. know whether Costa Rica imports or exports pharmaceuticals. b. compare the world price of pharmaceuticals to the price of pharmaceuticals that would prevail in Costa Rica if trade with the rest of the world were not allowed. c. compare the quantity of pharmaceuticals consumed in Costa Rica with the quantity of pharmaceuticals that would be consumed in Costa Rica if trade with the rest of the world were not allowed. d. All of the above are correct.
Government failure will likely arise if
A. Government officials attempt to maximize their own utility. B. There are no valuation problems. C. The free-rider problem occurs. D. Public services have reliable market prices.
Empirically, women who are married to a spouse who has access to health insurance earn higher wages and are less likely to be offered employer-sponsored health insurance than are married women whose spouse does not have access to health insurance. This pattern
A. supports the theory of compensating differentials as it indicates there is a trade-off between wages and benefits. B. supports the theory of compensating differentials as it indicates there is no trade-off between wages and benefits. C. fails to provide support for the theory of compensating differentials. D. contradicts the result that the hedonic wage function is upward sloping. E. is unexpected as wages should be unrelated to fringe benefits.