The purpose of fiscal policy should be to
a. balance the budget to be fiscally responsible.
b. balance aggregate supply and aggregate demand.
c. keep taxes low to keep voters happy.
d. minimize government spending to avoid wasting money.
b
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In the case of a specific tax the resulting price received by producers depends on
A) who pays the tax. B) the price elasticity of supply. C) the price elasticity of demand. D) All of the above.
In a market that is contestable, but has only a few sellers, the
a. threat of new entrants will prevent prices from rising above the competitive level. b. producers will be able to charge prices that are high enough to produce long-run economic profits. c. producers will not face new competition because the barriers to entry are high. d. market will never be expected to come close to the competitive result.
In the long run the monopolistic competitor always charges a price that is
A. equal to the minimum point of its ATC curve. B. below the minimum point of its ATC curve. C. above the minimum point of its ATC curve.
The cross price elasticity between A and B is 1.2. We can conclude that
A. goods A and B are unrelated. B. goods A and B are substitutes. C. goods A and B are complements. D. goods A and B are perfect substitutes.