Assume that the federal government wishes to counteract inflation with a policy that has the smallest impact on the federal budget. Which of the following would you recommend?
A. Increase transfer payments.
B. Increase government purchases.
C. Decrease government purchases.
D. Decrease transfer payments.
E. Increase personal income taxes.
Answer: C
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Economic growth takes place
A) only if the price level is constant or rising. B) when aggregate demand decreases. C) only when both aggregate demand and aggregate supply increase. D) when aggregate supply increases.
The most fundamental concept in economics is that
a. changes in incentives influence behavior in a predictable way--people will be less likely to choose an option as it becomes more expensive. b. changes in incentives generally do not influence human behavior. c. goods that are provided by government are free for society. d. individuals generally do not consider other alternatives when making a choice.
Which of the following will NOT affect the elasticity of demand for a product?
A. the cost of producing the product B. the number of substitutes C. the percentage of the consumer's budget spent on the product D. how long consumers have to adapt to price changes E. all of the above will affect the elasticity of demand for a product
Which of the following is TRUE?
a) MPS = MPC b) MPS + MPC = 1 c) MPS + MPC = 0 d) MPS - MPC = 1