As unemployment rose in 2008, non-discretionary fiscal policy measures included
A. major reductions in federal spending on bridges and highways.
B. provision of Universal Health Insurance for all Americans.
C. significant reductions in the income tax rates paid by high-income individuals.
D. increased spending on unemployment insurance, food stamps, and Medicaid.
Answer: D
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Answer the following statement(s) true (T) or false (F)
1. A Pigou tax forces car manufacturers to internalize the cost of pollution. 2. Cap and Trade is so named because the government puts a “cap” on the amount of exports that domestic firms are allowed to “trade” with foreign nations. 3. A Cap and Trade system is more prone to error than a Pigou tax. 4. Pigou taxes are unnecessary in the presence of transaction costs. 5. Pigovian analysis indicates that a subsidy should be awarded when economic activity creates social benefits.
When there is a recessionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; decline B. increase; raise; decline C. decline; lower; expand D. decline; raise; decline
When marginal revenue product of an input is less than its price, the producers should use less of the input
a. True b. False Indicate whether the statement is true or false
Which of the following is NOT a characteristic of the capitalist form of economic organization?
A. Central planning. B. A reliance on decentralized market processes for resource allocation purposes. C. Private ownership of productive resources. D. All decisions are made by the government.