Discretionary fiscal policy is best described as
A. an automatic change in income transfer payments to keep the economy at full employment.
B. a deliberate attempt to improve the functioning of free markets.
C. a deliberate action to move the economy toward full employment and price stability more quickly than it might otherwise.
D. the design of a tax system that automatically stabilizes economic activity over time.
Answer: C
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Suppose that an indifference curve for Jack is drawn measuring quantities of pencils along the horizontal axis and quantities of pens along the vertical axis. If the marginal value of an additional pencil is 3 pens for Jack, the slope of his indifference curve in this range is
a. 1/3. b. 3. c. 6. d. dependent upon the prices of the two goods
The above figure shows the marginal private cost curve, marginal social cost curve, and marginal social benefit curve for raising goats on a common pasture
A quota to prevent the overuse of the common pasture sets the number of goats to be raised equal to ________. A) 0 goats B) 40 goats C) 50 goats D) 55 goats
If leakages are less than injections, equilibrium output will be
A. More than full-employment output, and an inflationary gap will occur. B. More than full-employment output, and a recessionary gap will occur. C. Less than full-employment output, and a recessionary gap will occur. D. Less than full-employment output, and an inflationary gap will occur.
Because of a patent, Alcoa is the only manufacturer of soda cans with a stay-put tab. Alcoa can earn a profit on the sale of soda cans with stay-put tabs
A. in the long run because entry into the industry by new firms is blocked until the patent expires. B. only in the long run because government regulations prevent monopolists from earning profits in the short run. C. in the short run but not in the long run because new firms will enter the industry in the long run. D. in the long run but not the short run because the monopolist will face competition in the short run.