What is expansionary fiscal policy? What is contractionary fiscal policy?
What will be an ideal response?
An expansionary fiscal policy is a decrease in taxes or an increase in government purchases intended to increase aggregate demand. A contractionary fiscal policy is an increase in taxes or a decrease in government purchases intended to decrease aggregate demand.
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The main effect of a decrease in labor demand that arises from a decrease in capital stock is
A) lower real wages. B) shifts in unemployment. C) a need for fewer immigrant workers. D) companies make fewer profits.
Property taxes are a major source of revenue for
A) state and local governments. B) the federal governments. C) the federal, state, and local governments. D) firms wanting to relocate their operations. E) consumers.
If government is to allocate resources efficiently, _____
a. competition among local governments should be limited in scope b. local governments should transfer powers to state governments whenever possible c. public goods should always be provided by the federal government d. public goods should be devolved to local governments whenever feasible
The privately-owned school system in Smalltown has a virtually unlimited capacity. It accepts all applicants and operates on both tuition and private donations. Although every resident places value on having an educated community, the school's revenues have suffered lately due to a large decline in private donations from the elderly population. Since the benefit that each citizen receives from
having an educated community is a public good, which of the following would not be correct? a. The free-rider problem causes the private market to undersupply education to the community. b. The government can potentially help the market reach a socially optimal level of education. c. A tax increase to pay for education could potentially make the community better off. d. The private market is the best way to supply education.