Refer to the information. The administrative lag of fiscal policy is reflected in events:
Answer the question on the basis of the following sequence of events involving fiscal policy:
(1) The composite index of leading indicators turns downward for three consecutive months,
suggesting the possibility of a recession. (2) Economists reach agreement that the economy is
moving into a recession. (3) A tax cut is proposed in Congress. (4) The tax cut is passed by
Congress and signed by the president. (5) Consumption spending begins to rise, aggregate
demand increases, and the economy begins to recover.
A. 1 and 2.
B. 2 and 3.
C. 3 and 4.
D. 4 and 5.
C. 3 and 4.
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Refer to Figure 2-2. If Mendonca chooses to produce 160 pounds of vegetables, how much meat can it produce to maximize production?
A) 0 pounds of meat B) 30 pounds of meat C) 60 pounds of meat D) 120 pounds of meat
When the United States ran large budget deficits during 2001-2011,
a. private investment was strong and consumer expenditures declined as a percentage of GDP. b. private investment was weak and consumption increased as a share of GDP. c. the trade deficit of the United States shrank, indicating that borrowing from foreigners was declining. d. the deficits were financed exclusively through borrowing from domestic sources.
Refer to Scenario 1-2. Had the firm not produced and sold the last 500 cigars, would its profit be higher or lower, and if so by how much?
A) Its profit would be $500 lower. B) Its profit would be $500 higher. C) Its profit would be $1,000 higher. D) Its profit would be $1,500 lower.
Which of the following is NOT a reason for differences in per capita income in neoclassical growth theory?
A) All countries have the same production function. B) Countries have different savings rates. C) The slope of the steady-state investment line is different for different countries. D) All of the above.