An example of an automatic stabilizer is:
A. reduced unemployment rates during a boom means more people working, and the government pays less out in food assistance.
B. increased unemployment rates cause the government to pay out more in unemployment insurance.
C. increased tax revenues due to nominal income going up during a boom.
D. All of these are examples of automatic stabilizers.
Answer: D
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The expenditure approach to measuring GDP involves adding up the purchases of final goods and services by market participants
a. True b. False Indicate whether the statement is true or false
Fiscal drag refers to the
a. slowing effect on the economy that results from a government budget deficit. b. stimulating effect on the economy that results from a government budget deficit. c. stimulating effect on the economy that results from a government budget surplus. d. slowing effect on the economy that results from a government budget surplus.
If a firm stops production, then its:
A. variable costs decrease to zero. B. total costs decrease. C. fixed costs stay the same. D. All of these are true.
In the long run, an oligopolist is most likely to
A. Experience zero economic profits because barriers to entry do not exist in the long run. B. Face a straight demand curve. C. Produce at the most technically efficient output level due to long-run competition. D. Experience economic profits when sufficient barriers to entry are present.