The role of the progressive tax system as an autonomous fiscal stabilizer requires that the budget
a. should require actual deficits be equal to zero on average.
b. should go into a surplus at appropriate points in the business cycle.
c. cannot have a structural deficit component.
d. Both a and b
e. None of the above
B
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In a perfectly competitive market industry, firm's prices are equal to
a. Average revenue b. Marginal revenue c. Both a and b d. None of the above
Which of the following represents key strengths of the market economy as a system of allocation?
a. Goods and services are allocated based on willingness and ability to pay, rather than based on need. b. Producers have strong incentives to innovate because successful innovators are rewarded with higher profit. c. Since price is freely set based on supply and demand, shortages and surpluses are minimized. d. Both b. and c. above are correct.
Which of the following would prevent a labor market from being classified as perfectly competitive?
a. It is difficult for new workers to enter the market. b. All workers have the same abilities. c. Exiting the market is easy for workers who are currently in the market. d. Both buyers and sellers of labor are well-informed about market conditions. e. Each firm hires only a tiny fraction of the total labor in the market.
Which of the following will reduce the effectiveness of centralized economic planning?
A) The central planners spending the funds of taxpayers will make poorer investment choices than investors spending their own money. B) The central planners will be unable to obtain sufficient information for a sound economic plan in a world of dynamic change. C) All of the above. D) The choices of the central planners will be influenced by political, rather than economic, considerations.