In Figure 16-2 above, if user costs fall, U0 to U1, then area ________ represents the opportunity cost
A) ABE0U0
B) GE1V0V1
C) U0E0GU1
D) E0E1G
D
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If we compare the four sources of spending in the economy we see that
A) household consumption is the smallest. B) government expenditure is the largest. C) business investment is the largest. D) household consumption is the largest.
Assume the MPC is 0.75. To eliminate an AD shortfall of $200 billion, the government should
A. Increase taxes by $66.7 billion. B. Decrease spending by $50 billion. C. Increase spending by $50 billion. D. Increase spending by $800 billion.
A feature that distinguishes economists' approach to making choices is (are):
A) assigning opportunity costs a major role in their analyses of choices. B) assuming individuals make choices to maximize objectives. C) emphasizing that choices are made at the margin. D) all of the above.
The fiscal and monetary policy alternative to fine-tuning is
A) abandonment of both fiscal and monetary policy. B) abandonment of fiscal policy in favor of exclusive reliance on monetary policy. C) budgets established for the long term and a steady growth rate for the money stock. D) price and wage controls. E) redistribution of income in favor of those with a higher propensity to spend.