A political problem with discretionary fiscal policy is the
A. big-state bias.
B. contractionary bias.
C. overreaction bias.
D. expansionary bias.
Answer: D
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Which of the following would cause the long-run aggregate supply curve to shift to the right?
A) an increase in wages B) an increase in demand C) an increase in productivity D) an increase in taxes on profits
Among the prerequisites to economic development is
a. stability, which is provided by a traditional way of doing things b. a high birth rate c. low levels of saving d. the development of infrastructure such as roads and electricity e. the development of infrastructure such as forward and backward linkages
The marginal productivity principle says that a profit-maximizing firm should
a. hire capital until its marginal product is zero. b. hire labor until another worker costs more to hire than he can earn for the firm. c. hire the quantities of capital and of labor at which their marginal products are equal. d. hire capital until its marginal product is negative.
Which statement is FALSE?
A. Technological change is the key to productivity growth. B. Productivity is output per unit of input. C. The only way to build up capital is to consume more and save more. D. In the 1950s, 1960s, and 1970s, Americans managed to save about 7-8% of disposable income.